New Delhi: The government is likely to raise about Rs10,000 crore from the proposed divestment of its 11% stake in Coal India.
“The coal ministry and Coal India have had series of meetings with the department of disinvestment till date. The DoD expects the stake sale to generate around Rs10,000 crore for the government,” a person in the know of the development told PTI.
The government at present holds 100% equity in the country’s largest coal producer. It is planning to sell 10% of its stake through an initial public offering (IPO) which may happen in July-August. In addition, it will be offering 1% of its share to the employees of CIL and its subsidiaries which comprise about 4.16 lakh.
When contacted, CIL chairman Partha S Bhattacharyya declined to comment on the amount the Centre may raise from IPO, but said the IPO is on a fast track. “We might hit the capital markets by the end of July,” he said.
A draft proposal for government approval for selloff may reach the Cabinet by April end. Bhattacharyya, however, did not comment on it.
In the wake of the poor response to an auction-based route for selling its shares in two power firms NTPC, REC and NMDC, the government is likely to go for the book-building process which would offer a price band to investors to buy shares of the coal major, while CIL employees may get a 5% discount on the issue price.
“The Sebi had recently given special dispensation to Coal India by which it would be able to offer shares to employees of its subsidiaries as well,” Bhattacharyya added.
The government is likely to sell its 63.13 crore shares in the IPO, while the company’s employees could be offered an additional 6.31 shares.
The CIL disinvestments would be part of the government effort to raise about Rs40,000 crore through stake sale in 2010-11.
The country’s largest coal producer with 80% market share last week paid a dividend of Rs2,210 crore to the government for 2009-10.
“After our proposed listing, the reward of shares will spread to many investors. We want to share our prosperity with our shareholders. Today we have only one shareholder--the government and going forward we would have many,” said Bhattacharyya.