Govt keen to offload stake in Coal India by September
The government is in final stages of finalising process for share sale in state miner Coal India. The government has aimed to raise around Rs 40000 crore from stake sale in various state firm of which Coal India would make up for more than 50 percent.
Moneycontrol Bureau
The government is fine-tuning procedure for divesting its 10 percent stake in state miner Coal India before festive season kicks in. The government has aimed to raise around Rs 40000 crore from stake sale in various state firm of which Coal India would make up for more than 50 percent.An inter-ministerial group (IMG) of secretaries will meet on Wednesday to finalise the terms for appointment of merchant bankers and legal advisors. The government is going to appoint intermediaries by this month-end and expects to complete the sale process by September. However, the actual timing will depend upon the market sentiments, states an Economic Times report.The stake sale stake sale may be split into Offer for Sale (OFS) and buyback. Being a cash rich company, Coal India can participate in the buyback and help government raise funds, an official source recently told CNBC-TV18. The government currently holds 90 percent stake in Coal India (CIL). At the current price, a sale of 56.84 crore shares, or 10 percent of government holding, could fetch over Rs 20,000 crore to the exchequer.The Department of Disinvestment (DoD) has already floated a draft Cabinet note for seeking comments from administrative and other concerned ministries for a 10 percent stake sale in CIL in tranches.The DoD is awaiting opinion from the coal ministry for formulating the final Cabinet note.Last year the government had directed all central public sector firms to amend their Articles of Association to provide for buyback of shares, if such provisions did not exist.It (the Articles of Association) states that if a firm decides to buyback its own shares from the shareholders using surplus cash, the DoD may offer government's equity in the firm on behalf of the government.Coal India, with a cash balance of about Rs 60,000 crore, would need approval of the board before going in for a buyback. Read This: Accumulate Coal India; target Rs 368: Sushil Finance The DoD would soon invite bids from merchant bankers and legal advisers for managing the CIL stake sale.CIL got listed on the bourses in 2010 through an initial public offering, through which the government raised Rs 15,199 crore by selling 10 percent stake. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
