The government will sell up to 3 per cent of its holding in Coal India (CIL) which could fetch more than ₹4,000 crore. This is first major disinvestment in the current fiscal (2023-24).

“Offer for sale in CIL opens tomorrow (Thursday) for non-retail investors. Retail investors can bid on Friday. Government will divest 3 per cent equity including a Green Shoe option of 1.5 per cent,” Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM) said in a tweet.

Post disinvestment, the government’s holding will come down to 63.13 per cent.

Greenshoe option

In a notice to the BSE, the company said that it aims to offer over 9.24 crore shares, which is 1.5 per cent of the total holding. The government may sell another 9.24 crore shares under green-shoe option. The floor price has been kept at ₹225. At this price, including the green-shoe option, the government can get over ₹4,100 crore. At the closing price of ₹241.20 apiece on the BSE on Wednesday, the sale of 3 per cent stake in Coal India would be worth around ₹4,400 crore.

Non-retail investors can bid on June 1 and 2, while retail investors can bid only on June 2. Up to 5 per cent of the issue has been reserved for employees and they can make application up to ₹5 lakh. At least 25 per cent of the total offer is reserved for mutual funds.

Price hike

The share sale has been announced within 24 hours of the company increasing prices of non-coking coal by 8 per cent, which can have a positive impact on its revenue. Following this revision, CIL expects an incremental revenue of ₹2,703 crore for the balance period of the FY24.

Thermal coal is a non-coking coal used by power plants to generate electricity. A rise in its prices impacts the power generation cost. CIL, under the Ministry of Coal, is the largest coal producer in India. As per official data, in April 2022, the country’s overall coal production was 67.20 MT, of which CIL along with its subsidiaries produced 57.57 MT.

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