Is the government looking at selling 10 per cent stake in Coal India Ltd in tranches?

Caught between volatile markets, a time limit, as well as ₹56,900-crore shortfall in meeting the fiscal’s disinvestment target, a section within the government is of the view that CIL stake dilution should be done in small portions.

This view has been gaining ground with the Department of Disinvestment deferring the call for appointment of merchant bankers yet again. This will be the third disinvestment in CIL and the largest planned for this fiscal in revenue terms.

While officials in the Finance Ministry would prefer to dilute the approved 10 per cent stake at one go, others say that the target could still be achieved by a mix of small portion of Coal India and other PSUs such as Container Corporation, Oil India, Hindustan Copper, and NTPC shortlisted for the fiscal.

Those closely associated with the development told BusinessLine that the government is being cautious on the Coal India proposal. The latest disinvestment could take place early next year, a Finance Ministry official indicated.

Coal India is expected to fetch the government half of its target from the minority stake sale. At October 23 closing of ₹341.40 a share on the BSE, a 10 per cent disinvestment in CIL should raise over ₹21,500 crore for the government. The government owns 79.65 per cent in CIL.

The Budget 2015-16 had set a target of ₹69,500 crore from disinvestment, which includes ₹28,500 crore from strategic stake sales and ₹41,000 crore from minority stake sale such as in Coal India.

However, based on how the company’s stock had fallen during the week leading to the announcement of disinvestment in August, both the Coal Ministry as well as the prospective institutional investors have raised concerns like valuation and green compliance.

A Coal Ministry official said, “The earlier disinvestment happened when the sector itself was going through a crisis. Today, the situation has changed. The domestic output has improved significantly and there is more transparency in governance, environmental issues are also being sorted out.

The investors have more confidence in the portfolio.”

Till now the government has raised ₹12,600 crore from disinvestment in four PSUs: Indian Oil Corporation, Dredging Corporation of India, Power Finance Corporation, and Rural Electrification Corporation.