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The Cabinet Committee on Economic Affairs (CCEA) today gave its nod for 5 per cent stake sale in Neyveli Lignite Corporation (NLC).
The stake sale is "absolutely necessary" for the navaratna company to be compliant with SEBI’s minimum public shareholding norm, the Finance Minister, P. Chidambaram, said here on Friday.
After the stake sale, the Centre’s holding in NLC will come down from 93.56 per cent to 88.36 per cent.
The CCEA has approved divestment through an offer for sale route in the domestic market.
At today’s market price, a 5 per cent stake sale will fetch as much as Rs 466 crore to the exchequer, back-of-the-envelope calculation showed.
SEBI has set a deadline of August 2013 for all listed central public sector companies to have a minimum 10 per cent public shareholding.
Chidambaram said that the Centre does not want NLC to be visited with any penalties for not conforming to SEBI’s minimum shareholding norm.
Even after the latest 5 per cent stake sale, the public sector character will not change, he pointed out.
By being SEBI compliant, NLC will have the benefit of availing long term debt at better terms in coming days, he said.
Asked about Tamil Nadu Chief Minister, J. Jayalalitha’s letter opposing any disinvestment in NLC, Chidambaram said that the Prime Minister Manmohan Singh has given a detailed reply to the letter.
The reply details "why it is absolutely necessary" to sell 5 per cent stake, Chidambaram said.
Chidambaram also highlighted that there have been divestments earlier in NLC.
The Centre had offloaded 6.44 per cent stake in NLC in three different occasions during the period 2001-12, he said.
Jayalalitha had suggested delisting of NLC or amending the Securities Contracts (Regulation) Rule to make a special exemption for the company from the minimum public shareholding norm.
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