Government to appoint legal advisers for CIL’s divestment next week

S Narsing Rao, chairman CIL

THE government may clear by next week the appointment of legal advisers to oversee the disinvestment of five percent stake in Coal India Limited (CIL), the world's largest coal producer. Agency reports say there is a proposal…

to appoint two legal advisers. Seven merchant bankers including Goldman Sachs, Credit Suisse, Deutsche Bank and SBI Capital Markets have been selected to manage the stake sale in CIL.

The government currently holds 90 percent stake in the company. Shares will be allotted to CIL employees at five percent discount to the lowest cut-off price. A maximum of 10 percent of the offer will be kept for employees. The government plans to mop up Rs 40,000 crore this fiscal through divestment of PSU shares and CIL's stake sale would be the largest so far.

Initially, the government wanted to sell 10 percent stake in CIL but after strong protests from trade unions it has decided to sell five percent share. Finance minister P Chidambaram had also tried to allay fears of the trade unions, saying the disinvestment proceeds from CIL would be invested in PSU banks.

CIL was listed on the bourses in 2010 after the government raised Rs 15,199 crore by selling 10 percent stake in the country's biggest initial public offering (IPO). The CIL at present has a cash balance of about Rs 60,000 crore. The government plans to mop up Rs 40,000 crore this fiscal by way of disinvestment and CIL's stake sale would be the largest. So far, the government has collected over Rs 1,325 crore through PSU stake sales. At a time when the government is looking for more available cash, the disinvestment measure to a considerable extent will ease pressure on a beleaguered rupee. It will also help the government reduce the widening fiscal deficit.     

Meanwhile, the Coal India Limited has produced 31.67 million tonnes of coal in August, 2013 registering a growth of about 11 percent over the corresponding period of the previous year. This information was given by Union minister of coal Sriprakash Jaiswal to the members of Parliamentary Consultative Committee attached to his ministry on Thursday. He said during the period April-August, 2013, the cumulative coal production has been 167.32 million tonnes thereby registering a growth of about three percent over the like period of the previous year.

In another development, according a media report, the Coal India Limited has signed agreements to supply coal to 16 private power projects worth Rs 84,500 crore with a generation capacity of over 14,000 mega watts.