Business Daily from THE HINDU group of publications
Thursday, Jun 22, 2006
Business Daily from THE HINDU group of publications Thursday, Jun 22, 2006 |
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Coal Industry & Economy - Disinvestment Govt proposes to divest 5% stake in Coal India Ambarish Mukherjee
Disinvestment roadmap The five per cent sell off could fetch Rs 3,000-3,500 crore CIL to take up the issue with independent valuers The disinvestment proposal is for CIL and not its subsidiary
New Delhi , June 21 The Government has initiated the first move towards disinvestment of Coal India Ltd(CIL). Earlier this month, the Finance Ministry asked the Ministry of Coal to provide detailed financial information from Coal India and an assessment of the probable valuation of five per cent stake in the company that can be notched up through the initial public offering route, informed sources said.
Stake Value
According to initial discussions with rating agencies it appears that five per cent sell-off could garner anywhere between Rs 3,000 crore and Rs 3,500 crore, sources said. The Finance Ministry also asked the Coal Ministry to seek a third party opinion on probable valuation of the company. The Coal Ministry, on its part, has sounded CIL to furnish information on the rate of returns, tentative valuation of the share. "It has also asked the company to seek the opinion of independent chartered accountants on the valuation of the company's shares. CIL should be taking up the issue with independent valuers now," sources said. "We know that there would be a lot of resistance, which is why the plan is to sell off only five per cent of the company, which would in no way affect its functioning or the more than six lakh workforce," sources said. CIL has an equity base of Rs 6,316 crore comprising 6.316 crore equity shares of Rs 1,000 each. According to the plans, the shares of Rs 1,000 face value would be split to 100 shares of Rs 10 face value before the public offering.
High Premium
"After this the five per cent equity to be sold by the Government would bear the face value of Rs 315.8 crore. There had already been informal discussions with rating agencies, which have suggested that the shares would command very high premium and may notch up anywhere between Rs 3,000 and Rs 3,500 crore for the Government," sources said. Earlier, the Disinvestment Commission had recommended sale of 49 per cent stake in CIL's mining consultancy subsidiary — Central Mine Planning and Design Institute to a strategic partner after making it an independent company. The present disinvestment proposal is for CIL as the holding company and not for any of its subsidiary, sources clarified.
Related Stories: More Stories on : Coal | Disinvestment | IPOs
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