Indian government plans to divest up to 10% in Coal India by August, a move that will help it earn about Rs 20,000 crore at today's prices and reduce its stake to 69%, the Economic Times reported on February 13.
The government is likely to divest between 5% and 10%. It already has permission for divesting 10% in the company. At present, the government holds 79.78% in the company, a senior Coal India executive said on condition of anonymity.
Last year, Coal India offered to buy-back 1.7% (10.89 crore shares) of its fully paid-up equity shares at Rs 335 per share totalling Rs 3,650 crore. After the buy-back, the government's holding in Coal India increased marginally to 79.78% from 79.68%
If the government divests 10% of its shares, it is likely to help the Centre raise around Rs 20,000 crore 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 2015-2016, this year 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 realisation from e-auction has been falling due to reduced demand.
Nevertheless, Coal India share price has been falling from September last year till January, after which it started to rise on anticipation of marginal better performance as coal production picks up after the monsoons every year, said an analyst.
(Writing by Tammy Yang Editing by Harry Huo)
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