The proposal for disinvestment of Neyveli Lignite equity has not gone well with employees who believe in preserving the public sector character of the mining and power generation company.
Employees of state-run Neyveli Lignite (NLC) have struck work against the 5 percent divestment proposal of the company. However, the company is hopeful of the strike being called off in a day or two.
In an interview to CNBC-TV18, B Surender Mohan, chairman of Neyveli said that the there is not much impact on power production due to the ongoing strike. "The state and the union govermnent’s will meet on July 11 to discuss company specific issues," he added.
The proposal for disinvestment of NLC's equity has not gone well with employees who believe in preserving the public sector character of the mining and power generation company.
The Centre currently holds 93.56 percent stake in NLC. The stake sale is being proposed done to meet the minimum public holding norm. SEBI has set a deadline of August 8, 2013, for all listed central public sector units to have a minimum 10 per cent public shareholding.
The Cabinet had last month cleared sale of 7.8 crore shares, or 5 percent of government’s stake, through an offer for sale in NLC to raise Rs 455 crore at current prices.
Below is the edited transcript of his interview with CNBC-TV18:
Q: Can you give us an idea on what the current status is with regards to the divestment?
A. Divestment plan is on the anvil as your all are aware. Currently, the government holds 93.5 percent ownership in the company and there is a proposal of its selling 5 percent stake. Unions and political parties are however opposing it for which there is a meeting on July 11 in Delhi wherein the decision will be taken for the same. Workers are on strike strike since six days, opposing stake sale plan, which will help us raise around Rs 500 crore.
Q: What is the likelihood that the unions will accept this solution, what exactly are they waiting for, when might they resume work?
A: It is very difficult to answer because all the unions are actively related to political parties. They are having political tie-ups. Unless they get proper directions from their political leaders, they are not going to stop the strike. The court has given a stay order against strike. Officers have joined back but the workers are still on strike.
Q: How much has the power generation fallen in these six days of strike that you have seen? How much has production dropped?
A: At present we are having 2,390 megawatt (MW). We are pursuing 2,340 MW as of now. Today if you have to see, we are working at 2,345 against 2,390. 100 MW is under shut down due to annual repairs.
Q: What is the percentage of labour on strike then?
A: Almost 80 percent people are on strike.
Q: You are still able to manage nearly 95 percent output?
A: Yes. We cannot carry out all the work. We are carrying out mainly operational work.
Q: The state government had identified a couple of companies like TIDCO to buy the Neyveli Lignite shares, do you think they are financially stable enough to buy the shares, they have the excess cash so you think this proposal will go through?
A: When the chief minister herself has proposed these names, she must have considered all these things before giving an offer. I cannot comment on this.
Q: Do you see a quick end to the strike if the proposal is agreed to by the Central government?
A: We hope in another day or two it should be called off.
Q: The divestment has been deferred for a while now, it could not take place in FY13 as well, do you think because of the situation that is currently underway even meeting the divestment by FY14 will be a challenge?
A: State government can pay, there is no problem. Once it is considered as a part of the fulfillment of SEBI guidelines, definitely once state government pays then the issue is closed. In spite of our finance, our physical performance has been very good. But the share value is not representing the actual -- because very few percentages is with public.
Neyveli Lignite stock price
On September 23, 2014, Neyveli Lignite Corporation closed at Rs 84.60, down Rs 3.65, or 4.14 percent. The 52-week high of the share was Rs 108.50 and the 52-week low was Rs 54.55.
The company's trailing 12-month (TTM) EPS was at Rs 9.28 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 9.12. The latest book value of the company is Rs 82.87 per share. At current value, the price-to-book value of the company is 1.02.
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