The Government of India is planning to divest up to 10% in Coal India by August. The move will help it earn approximately Rs 20,000 crores and reduce its stake to 69%. The government is likely to divest between 5% and 10%. It already has permission for divesting 10% in the company. Currently, according to a senior executive at Coal India, the government holds 79.78% in the company. In 2016,...
The Government of India is planning to divest up to 10% in Coal India by August. The move will help it earn approximately Rs 20,000 crores and reduce its stake to 69%.
The government is likely to divest between 5% and 10%. It already has permission for divesting 10% in the company. Currently, according to a senior executive at Coal India, the government holds 79.78% in the company.
In 2016, Coal India offered to buy-back 1.7% (10.89 crore shares) of its fully paid-up equity shares at Rs 335 per share, totaling to Rs 3,650 crores. After the buy-back, the government’s holding in Coal India increased marginally from 79.68% to 79.78%.
If the government divests 10% of its shares, it is likely to help the Centre raise approximately Rs 20,000 crores and will allow Coal India to conform to holding norms in which a public-listed company needs to have at least 25% shares listed on stock exchanges, the executive said.
The company has been witnessing a fall in production as well as sales due to less than anticipated power demand growth. Against a near 10% growth in 2015-16, in 2017, the company has not been able to attain a growth of even 2% either in sales or production.
The timing of the divestment will be crucial because the company has not been able to fulfill its targets. Revenues and profits are likely to be less than anticipated as price realization from e-auction has been falling due to reduced demand.