Amid a strike call by coal workers, the Government has kicked off the process for disinvestment in Coal India Ltd. However, it is now official that only 5 per cent Government equity will be sold, not 10 per cent as planned earlier.
On Thursday, the Department of Disinvestment under the Finance Ministry advertised for appointment of merchant bankers and selling brokers for the divestment. The Government plans the disinvestment through the offer-for-sale (OFS) mechanism, better known as the auction method. At present, the Government holds 90 per cent in the company.
Shares of Coal India closed up over 2 per cent at Rs 268.20 on Thursday. At this price, the Government can mop up over Rs 8,400 crore.
Roping in employees
The Government is also considering allotting shares to eligible and willing employees of Coal India at a discount of 5 per cent to the issue or discovered price.
Total shares allotted under this category will be up to a maximum of 0.5 per cent of total equity. This will be done after the OFS process is completed. The employees will be eligible to apply for shares up to Rs 2 lakh. The method and procedure of share allotment to employees has been worked out in consultation with the merchant bankers or selling brokers and legal advisers to past issues and has been referred to the market regulator, SEBI. Merchant bankers/selling brokers will be required to render such assistance as may be required in this connection.
Coal India has an authorised capital of Rs 8,904.18 crore.
Following one of the biggest issues in the country, its shares were listed on the stock exchanges on November 4, 2010 and made it to the 30-stock Sensex on August 8, 2011 – a short span of nine months since listing.
The initiation of disinvestment is taking place at a time when workers of the company have threatened to go on strike against the sale. Coal India workers are represented by central trade unions — INTUC, HMS, BMS, AICWF, CITU and AITUC. According to the unions, the stake sale would adversely impact its workers across 35 districts in the country.
However, Coal Ministry maintains that most of the trade unions have agreed for 5 per cent share sale.