Kolkata: State-owned coal miner Coal India Ltd (CIL) will pay workers around Rs5,000 crore in salary arrears to help employees subscribe to the company’s forthcoming initial public offering (IPO).
As many as 63 million shares, or 10% of the equity being sold by the Union government, are reserved for 410,000 employees of CIL and its eight wholly owned subsidiaries. They are entitled to a 5% discount on the issue price.
“The payment has been timed to make sure that the shares reserved for CIL’s employees are sold out,” said a CIL official, who did not want to be named.
The company’s trade unions are opposed to the share sale and some, if not all, may advise employees against subscribing to the IPO, according to M.K. Pandhe, general secretary of the Centre of Indian Trade Unions (Citu).
The move comes amid recent share sales by the Union government in companies such as NMDC Ltd, NTPC Ltd and Rural Electrification Corp. Ltd, which received a tepid response from retail investors.
Wages of CIL’s workers were revised effective July 2006 under National Coal Wage Agreement VIII and the company began paying the new salaries from April, according to R. Mohan Das, CIL’s director (personnel and industrial relations). Workers’ wages are normally revised once every five years, he said.
Salaries for officers were revised effective January 2007, with CIL starting to pay the increased wages in May. Workers will be receiving arrears for 33 months and officers for 28 months, he said. The back wages will be paid in April, Das said.
CIL has been putting aside cash for the arrears for the last three years. In 2008-09 alone, the company made a provision of Rs6,064.54 crore in its accounts for various employee benefits, including back wages, according to Das.
The company will “launch a campaign of sorts to encourage people to buy” the shares reserved for them, said the CIL official quoted in the first instance. CIL had obtained special permission from the Securities and Exchange Board of India, the stock market regulator, to reserve shares for employees of subsidiaries.
Under Indian regulations, a company is normally allowed to reserve shares only for its own employees.
The unions say the move threatens to take the company out of government hands.
Gurudas Dasgupta, general secretary of the All India Trade Union Congress, said the share sale in CIL was “a form of privatization” and that his union was opposed to such a process in profit-making public sector companies.
Citu’s Pandhe said the five trade unions of CIL and its subsidiaries would meet in Ranchi, the capital of Jharkhand, on 27 March to decide “a course of action to protest the government’s share sale” in the coal miner.
CIL has been planning an IPO for at least two years, but because of resistance from Left-backed trade unions and the Left parties, which earlier supported the Congress-led United Progressive Alliance government at the Centre, the company could not list its shares.