Millennium Post

Govt set to throw away 10% CIL stake today

The floor price was fixed on Thursday at a discount of about 5 per cent from the current market price of Coal India (CIL), where the government presently holds nearly 90 per cent stake.

In the one-day stake sale, to be conducted on Friday during market hours from 9 am to 3.30 pm, the government will sell 31.58 crore shares or 5 per cent stake with an option to sell a further 5 per cent stake depending on the demand.

At the floor price, the total 10 per cent stake can fetch the government Rs 22,600 crore, although retail investors would get a five per cent price discount and 20 per cent shares worth over Rs 4,000 crore would be reserved for them.

This would exceed the existing record amount of over Rs 15,000 crore raised through a public offer, which was also by CIL when it had entered the market with its IPO in 2010. CIL shares were sold at a price of Rs 245 in the IPO, which was oversubscribed by more than 15 times.

The government will have to dilute its stake by further 5 per cent at a later stage to meet the capital market norms of maximum 75 per cent promoter shareholding in a listed company.

Friday’s share sale would also help the government on its disinvestment target of Rs 43,425 crore for the current fiscal ending on March 31, out of which it has so far collected less than Rs 1,800 crore.

Opposing the move, trade unions on Thursday said they will hold “symbolic demonstration” on Friday to protest against the disinvestment and also warned of a possible strike at a later stage after discussing the matter among all central unions.

The stock exchanges on Thursday also sought clarification from the company on media reports that unions have threated to ‘go slow’, to which CIL replied that it has not received any notice from any union in this regard. In the meantime, markets regulator Sebi and the stock exchanges including BSE and NSE have put their surveillance systems on ‘high alert’ to thwart any manipulative activities in Coal India shares in the wake of the divestment programme.

Coal India would be second company to hit the markets under the government’s disinvestment programme in the current fiscal 2014-15, the first being SAIL in which shares worth about Rs 1,700 crore were sold. Coal India alone can help the government meet more than half of the total target.
The government will need to sell shares worth further Rs 20,000 crore in public sector firms in about two months left in the current fiscal to help meet its fiscal deficit target of 4.1 per cent of GDP for this financial year.
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