New Delhi: Just months after a massive Rs 22,600 crore disinvestment, Coal India is back in the reckoning for another stake sale.
The Finance Ministry is said to be considering shedding 5% in the public sector giant in 2015-16, Business Standard has learnt. The move will bring down the centre’s stake to 75%, as mandated by markets regulator Securities and Exchange Board of India (Sebi).
At current market prices, a 5% stake is valued at between Rs 12,000 crore and Rs 13,000 crore, which would be a big boost for the minority stake sale target of Rs 41,000 crore budgeted for this fiscal.
According to senior government officials if there appears to be a big lag between the budgeted target and the realised proceeds at the end of October, the Finance Ministry’s department of disinvestment may seek cabinet approval for Coal India divestment, so that the planned stake can be sold before the end of the current fiscal year.
“Coal India cannot be ruled out (for stake sale) this fiscal as well. A final call will be taken by October. But if the need arises, there will be a 5% divestment,” a senior government official told Business Standard.
In January, the union government sold a 10% stake in Coal India as part of its disinvestment plan for FY2015. At Rs 22,600 crore, it was the single largest stake sale ever executed by the government. The issue, however, was undersubsribed in the quota offered to retail investors; state-owned insurance companies reportedly picked up the slack.
There is no precedent of a single company’s stake being divested in consecutive fiscal years, and certainly not such big amounts. Usually, there is a gap of a full fiscal year between such sales for fear of loss of investor appetite. However, officials say that the ambitious target for 2015-16 has compelled them to do things differently.
“There isn’t a precedent for divesting stakes right from the first month of a fiscal year either. Yet the government started off early with Rural Electrification Corp,” said a second official aware of the developments regarding stake sales. Earlier in April, a successful stake sale in REC raised around Rs 1,600 crore for the centre. A 5% stake in Power Finance Corp is also likely to be divested before month end.
