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CIL divestment: Coal Min turns to Finance, Law Ministries

Last Updated: Sunday, September 13, 2009 - 13:36

New Delhi: The Coal Ministry has approached the Department of Disinvestment for determining the value of Coal India`s shares ahead of the PSU`s proposed disinvestment.

The Coal Ministry has also sought the Law Ministry`s opinion on a proposal for giving stock option to its employees and allotment of shares to those who have lost land for mining purposes, highly placed sources in the ministry said.

"The Coal Ministry is seeking views from the Department of Disinvestment on valuation of CIL`s shares. It is also seeking legal opinion on the shares to be given to the company`s employees and land-losers on the preferential basis," a senior ministry official told reporters.

Asked if the quantum of government`s stake to be sold through the process of disinvestment has been ascertained, he said, "Coal India`s proposal regarding disinvestment has been received but a final figure is yet to be arrived at. Let us first see what does the two ministries suggest."

Besides seeking the two ministries views regarding
disinvestment, the Coal Ministry has also written to the
Public Enterprise Selection Board, regarding appointment of
additional full-time directors on the coal major`s board.

Coal India needs to have seven full-time directors on its
board from the present four in order to be a `Public Ltd`, a
pre-requisite for coming out with an IPO. It is registered as a
`Private Ltd` entity at present.

Last week, Coal India Chairman P S Bhattacharyya had
sought from the government delinking of shares to be given to
its employees and land-losers from the equity to be
channelised towards public offer.

Coal Minister Sriprakash Jaiswal had said that a maximum
of 10 percent of government`s stake could be divested in the
coal major in the first phase. However, another Coal Ministry
official said that about 15 percent of government`s stake
could be diluted in the firm.

While the officials did not specify any time-frame on the
IPO, the company and the ministry is also in touch with market
regulator SEBI on the proposal. Also, Bhattacharyya had met
Disinvestment Secretary Sunil Mitra last month to discuss the
stake-sale proposal.

It was given Navratna status last year and was asked to
get listed before September 2011. But, industry observers
anticipate listing to happen in an year`s time.

The government, which owns 100 per cent equity in the
company, has already given its permission to slash the face
value of the shares to Rs 10 from Rs 1,000, a move aimed at
expanding the firm`s equity base.

The company has a paid-up equity capital of about
Rs 6,316 crore. It clocked a pre-tax profit of Rs 8,738.46
crore in the last fiscal.

Prior to the proposed stake-sale, the Coal Ministry would
have to introduce a bill to amend the present Coal Mines
Nationalisation Act.

Bureau Report

First Published: Sunday, September 13, 2009 - 13:36
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