CIL to move SEBI for selloff guidelines

Last Updated: Sunday, November 15, 2009 - 11:16

New Delhi: Coal India will soon approach the
market regulator SEBI seeking clarity on whether the PSU can
issue shares to the employees of its subsidiaries at the time
of disinvestment and the Initial Public Offer.

The government had cleared up to 10 percent equity
dilution in Coal India Ltd (CIL) last week and the coal major
has already submitted an initial proposal to the Coal
Ministry.

The Finance Ministry has sought some clarifications from
the Coal Ministry with regard to CIL disinvestment,
officials said, adding that the coal PSU would soon be
submitting a revised proposal after reply from SEBI.

"We are preparing a set of queries to take it to SEBI to
seek clarity on issues before submitting the revised proposal.
The queries include whether CIL, the holding company, can
provide shares to the employees of its subsidiary companies,"
Coal India Chairman Partha S Bhattacharyya told an agency here
on Sunday.

"The issues are tedious and we are deliberating on these.
Five of the CIL subsidiaries are highly profit-making, while
two - Bharat Coking Coal Ltd and Eastern Coalfields Ltd-- are
ailing for which we are mobilising a Rs 1,600-crore funding to
take them out of the Board for Industrial & Financial
Reconstruction`s (BIFR) purview in the next two years,"
Bhattacharyya added.

CIL is likely to secure a medium-term loan of about Rs
1,600-crore for these two subsidiaries out of which Rs 1,000
crore will be to bail out Bharat Coking Coal Ltd (BCCL).

"There are complex legal issues too, such as the
modalities to issue shares to land losers, rehabilitation and
resettlement issues for which we will seek clarification," he
said.

Earlier, the Department of Disinvestment had sent back
the CIL disinvestment proposal to the Coal Ministry seeking
clarification on a host of issues, including whether the
Ministry wanted to sell its stake or the company wanted to
issue fresh equity.

The Department of Disinvestment is under the
administrative jurisdiction of the Finance Ministry.

A meeting in this connection was also held on October 16
at the Divestment Department, participated by both the
Ministry and CIL officials and a range of issues were
discussed, the official added.

Last month, the Coal Ministry had approached the
Disinvestment Department for determining the value of CIL
shares ahead of the PSU`s proposed disinvestment and also
sought the Law Ministry`s opinion on some contents of the
plan.

The Coal Ministry had also sought legal opinion on the
shares to be given to the employees of CIL and its
subsidiaries and land-losers.

Besides seeking the views of the two ministries regarding
disinvestment, the Coal Ministry had 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 to become a `public ltd company`,
a pre-requisite for coming out with an IPO. It is registered
as a `private ltd` entity at present.

CIL was accorded the Navratna status last year and was
asked to get listed before September 2011. But, industry
observers anticipate listing to happen in an year.

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 will
have to introduce a Bill in Parliament to amend the Coal Mines
Nationalisation Act.

Meanwhile, the coal giant is likely to appoint a merchant
banker shortly to advise it on the proposed selloff.

Bureau Report



First Published: Sunday, November 15, 2009 - 11:16

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