Three-weeks after the Government had successfully cut short a five-day long nation-wide strike called by the unions of Coal India ltd (CIl) to protest against the company’s disinvestment, the biggest share sale of the current fiscal is all set to take place on Friday. The 10 per cent stake sale exercise by the Government is likely to it an estimated Rs22,600 crore as the share price has been fixed at Rs358 a piece.
Even as the five CIl unions have threatened to hold nation-wide demonstrations against the move on Friday, the Centre seems to have adopted a firm stand on the issue and plans to go ahead with the disinvestment on January 30. Sources privy to the development confirmed to The Pioneer that the disinvestment exercise is being conducted as per provisions of Sebi and despite reservations from the unions, the stake sale will take place as scheduled, as this will not only help kick start reforms in the coal sector but also provide impetus to long term investments in the country.
They acknowledged the reservations of the unions, but at the same time added that it will only help in benefitting the entire sector - of which CIl too is a part - in times to come. The unions also alleged that a panel which the Coal Ministry had promised to set up for looking into the grievances of workers and concerns related to the disinvestment, has not been formed, almost a month after the strike ended. At the same time though, a section of the unions is of the view that the disinvestment will happen and the Government in future may further dilute its share in CIl. A union representative said that they at best can only delay the inevitable.
Official sources, however, told this newspaper that the committee, which will have representatives from unions, CIl as well as Singreni Collieries Company ltd (SCCl) - and which will be headed by a Joint Secretary from the Coal Ministry - has been formed and a notice for the first meeting, too, has been sent. Meanwhile the floor price fixed by the Government on Thursday, is at a discount of about 5 per cent from the current market price of CIl, where the Government presently holds nearly 90 per cent share.
In the one-day stake sale, to be conducted on January 30, 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 Rs22,600 crore, although retail investors would get a five per cent price discount and 20 per cent shares worth over Rs4,000 crore would be reserved for them.
This would exceed the existing record amount of over Rs15,000 crore raised through a public offer, which was also by CIl when it had entered the market with its IPO in 2010. 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.
The January 30 share sale would also help the Government on its disinvestment target of Rs43,425 crore for the current fiscal ending on March 31, out of which it has so far collected less than Rs1,700 crore. 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.
CIl would be the second company to hit the markets under the Government’s disinvestment programme in the current fiscal, the first being SAIl in which shares worth about Rs1,700 crore were sold. Coal India alone can help the Government meet more than half of the total target.