New Delhi: India will sell up to 10% of its holding in state-owned Coal India Ltd, a minister said on Wednesday, in the latest share sale plan announced by the government to raise funds and plug a bloated fiscal deficit.
Policymakers have said raising revenue through divestments would help keep a lid on the fiscal deficit, which was at 6.2% of gross domestic product in the year ended 31 March.
Two state-owned firms, Oil India Ltd and power generator NHPC Ltd, make up nearly half of the expected $1.5 billion worth of share sales ready to hit the market through 18 IPOs, data from Indian deal tracker SMC Capital showed.
Coal minister Sriprakash Jaiswal said the government hoped to sell some stake in Coal India in the current fiscal year.
“Disinvestment in the coal sector is absolutely necessary,” he told a news conference. “The target we have kept is up to 10%.”
Coal India, which contributes 85% of India’s coal output, aims to produce 435 million tonnes in 2009-10, nearly 8% higher than the previous year.
The company had sales of Rs32,634 crore ($6.8 billion) in the fiscal year ended March 2008, and profit before tax of Rs8,738 crore, according to the latest available data on its website.
Jaiswal said the government would give priority to the coal miner’s employees and people who have lost their land, while issuing shares.
An 80% jump in the main stock index from its March low is seen aiding share sales. Shares in listed state-run companies have risen about 74% in the same period.
“Seeing the price movement in the public sector units stocks, there is quite a lot of confidence in them, especially amongst foreign investors,” said RK Gupta, managing director at Taurus Asset Management in New Delhi.