The Government seems to have tightened its belt towards fulfilling the ambitious Rs55,000 crore disinvestment target for the current fiscal as according to informed sources, the Department of Disinvestment (DoD) has moved a proposal for divesting Centre's 5 per cent stake in Coal India ltd (CIl) and another 5 per cent through share buyback - a process through which it aims to garner around Rs20,000 crore.
According to sources privy to information, the DoD has sent the proposal to the Coal Ministry for its consideration, conveying that since CIl - which comes under the purview of that ministry - is sitting on a cash deposit of around Rs58,000 crore, it would be in a position to buy back the Government's shares (worth Rs10,000 crore). The remaining Rs10,000 crore, the DoD aims to generate by offloading the Centre's stake in CIl.
The Coal Ministry as well as CIl are expected to get back to the DoD with their views on the proposal. The proposal, sources added, is at a nascent stage (since it is only a proposal) and it would only concretise once a favourable opinion is generated on it within the Coal Ministry and CIl management.
Official sources informed The Pioneer that CIl has not come out with any specific plan regarding what it aims to do with its cash pile and therefore the DoD is learnt to have suggested that the coal behemoth should be open to the proposal of buying the Government's shares in it.
According to the proposal, the reason behind the DoD having suggested a mix of share buyback as well as offloading of the Government's stake in CIl, emanates from a possibility that there may objections within the company about going in for 10 per cent disinvestment in it.
As happened in case of NAlCO, whose disinvestment proposal kick started a political storm in Odisha with the ruling BJD protesting sale of Government's stake in a profit making PSU by comparing it to pawning off its valuable assets, the DoD seems to have taken cue from that instance and suggested a middle path.
CIl is being considered as the biggest fundraiser for the Government through the disinvestment route in 2013-14 along with other Maharatna companies like Indian Oil Corporation (IOC) and BHEl, as out of the total target of Rs55,000 crore it would be able to generate Rs20,000 crore (or almost 36 per cent of the total target) by divesting its stake as well as through share buyback in it.
Sources said that if the share buyback route is accepted by the CIl management (along with the divestment method), then it could address any apprehensions among the employees by giving them ESOPS (employees stock ownership plan) in future.
Meanwhile in the newly begun financial year, the DoD has identified several state-owned companies where Government could divest its stake and apart from CIl, IOC and BHEl, these are: Power Grid Corp of India ltd, National Hydroelectric Power Corp (NHPC), Neyveli lignite Corp and Hindustan Aeronautics ltd.
CIl and IOC alone are expected to garner around Rs27,000 crore for the Government, sources added.
Out of the Rs 55,000 crore disinvestment target, Rs 40,000 crore is expected to be garnered through Government offloading its stake in state-owned companies, while the remaining Rs 15,000 crore is to be generated by Centre offloading its stake in companies where it has residual stake.