CIL disinvestment unlikely before start of next fiscal

The Coal Ministry intends to divest 10 per cent stake in its behemoth Coal India Limited...

The Coal Ministry intends to divest 10 per cent stake in its behemoth Coal India Limited (CIL),but the PSU may be able to do so only in the beginning of the next fiscal owing to various procedural issues.

Coal minister Sriprakash Jaiswal has asserted that the government could divest up to 10 per cent of its stake in the countrys largest state-run coal producer by the end of 2009-10 a move intended to bail the behemoth out of its fiscal woes caused by enhanced operational costs and a high wage burden after the sixth pay commission recommendations. The government is working on a proposal to disinvest up to 10 per cent of its stake in Coal India. The process is likely to be completed by the end of this fiscal, Jaiswal said while unveiling his ministrys action plan for the next 100 days. Jaiswal has already met finance minister Pranab Mukherjee and discussed the issue.

I have been asked by the government to get the PSU listed within three years of being conferred the navratna status (in October 2008),which is before October 2011. We will do it by that period, was all Partha S Bhattacharya,chairman and managing director of CIL,told The Indian Express when asked about his readiness to do so. Listing CIL would help us in mobilising resources to lessen our wage bill arrears as well as expedite our Relief and Rehabilitation Policy to further our expansion plans, he said. In the process of disinvestment,the government may offload its stake to offer shares to CIL employees along with taking the IPO route.

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CIL has an equity base of Rs 6,316 crore comprising equity shares of Rs 1,000 each,sources said. Shares of Rs 1,000 face value would likely be split into 100 shares of Rs 10 face value before the IPO,sources said.

Offloading government stake up to 10 per cent could mobilise money to the tune of Rs 7,000 crore. CIL sources said the PSU now believes that the navratna status would fetch it a better valuation of its shares besides allowing it greater financial autonomy. Since the company has a very credible record over the years and has been profitable as well,there is no reason why it should not be listed, they pointed out. But the political fallout of such a move may not be palatable for the UPA as it could trigger serious opposition from the Left parties.