Coal India Ltd has told the Union Government that it is open to utilise up to one-fourth of its projected Rs 60,000 crore cash reserve as of March 2012, to help the Centre mitigate the fiscal deficit; provided the company is ‘assured' of a return, not less than the existing interest income from such reserves.
CIL earned an interest income of nearly Rs 1,800 crore in the July-September 2011 quarter from a cash reserve of Rs 45,000 crore. The interest income was nearly 70 per cent of the net profit of the company during the quarter.
With chances of meeting the disinvestment target through public offer getting slimmer due to sluggish market condition, the Union Government recently asked the Central public sector companies to ascertain the cash position.
The initiative is reportedly aimed at exploring options such as share buyback by cash-rich PSUs or encouraging PSUs to pick up stake in peers thereby releasing the much needed cash for the Government.
“The Government had recently wanted to know about our cash reserves position. We will have reserves of about Rs 60,000 crore by March 2012. We have indicated that we will require three-fourths of it to meet capex requirements,” Mr N.C. Jha, Chairman, Coal India, told newspersons on the sidelines of a seminar organised by the Confederation of Indian Industry here on Tuesday.
He, however, clarified that the Government has not issued any directive on possible use of such funds, as ascertained by the company.
Sources, however, told Business Line that the company in its response clarified that the company could part with the cash against an “assured income”.
“The cash reserve brings us an assured interest income and is contributing to the net profit of the company. We can part with some cash, if the shareholders so desire, provided, it does not impact our profitability,” a source added.
Shares CIL closed at Rs 302.55, 1.68 per cent higher than the previous closing, at BSE on November 22.