Govt approves 10% stake sale in Coal India, eyes Rs 20000cr

Giving a major fillip to the government’s disinvestment plans, the Union Cabinet on Wednesday approved a 10 per cent stake sale in Coal India (CIL) and initial public offering (IPO) of Cochin Shipyard Ltd (CSL). It owns 79.65 percent of Coal India. The Government had sold 10 per cent stake in Coal India for more than Rs 25,000 crore in January this year.

The divestment could raise as much as 200 billion Indian rupees ($3.02 billion), he said.

With about four months left for the fiscal to end, the government seems to be betting on Coal India (CIL) in a big way to meet its disinvestment target for 2015-16.

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The government hopes to raise between Rs.23,000 crore and Rs.24,000 crore through this stake sale. “The Cabinet decisions are targeted at revival of the economy and would go a long way towards boosting investor sentiments”, CII President Sumit Mazumder said in a statement. “Ideally, you should give time to the stock to recover”, said the source.

After the disinvestment of 10 percent equity, the GoI?s shareholding in CIL would come down to 68.65 percent (with slight variation based on outcome of sale of onepercent equity shares to employees of CIL).

The government official also said that foreign investors have raised concerns over the environmental issues of the company. “There are lots of environmental issues”.

At 2:43 pm, the Coal India stock was trading 0.57 per cent up at Rs 334.10, outperforming the broader Nifty and the Sensex which were in the red.