An Inter-ministerial Group (IMG), has approved 10 per cent equity sale in Coal India which is expected to fetch over Rs 17,000 crore to the government.
At present, the government holds 90 per cent stake in Coal India Ltd (CIL). “Yesterday, the IMG meeting took place to chalk out the process. The panel has given its nod for the government’s 10 per cent stake in CIL,” an official told.
However, the mode of disinvestment of the PSU could not be decided — whether the share sale would be through Offer For Sale (OFS) or buyback taking into the consideration the market conditions, he said.
“The 10 per cent stake sale may be split into Offer for Sale (OFS) and buyback. The DoD will soon decide the method of the government’s share sale in the company,” he added.
The IMG, headed by Disinvestment Secretary Ravi Mathur, is guiding the process of disinvestment of government's equity in CIL. Besides, the panel has members drawn from Ministry of Coal, Departments of Legal Affairs, Economic Affairs, Corporate Affairs and Chairman-cum-Managing Director of CIL.
Coal India, which has a cash balance of about Rs 60,000 crore, will be the biggest disinvestment for the government in the 2013-14 fiscal. The government plans to raise Rs 40,000 crore by way of PSU stake sale this fiscal.
Market regulator SEBI had introduced OFS and allows companies to sell shares in a simplified process on the stock market platform through a one-day bidding.
Also, the government had last year directed all central PSUs 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 CPSE decides to buyback its own shares from the shareholders using surplus cash, the Department of Disinvestment (DoD) may offer government's equity in the firm on behalf of the government.
“Selection of merchant bankers and legal advisers for managing the CIL stake sale would be done in the next meeting,” the official said.
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 per cent stake. Shares of CIL closed at Rs 308.90 on Thursday, down 1.09 per cent, on the BSE.
