CIL to move SEBI for selloff guidelines
  • This Section
  • Latest
  • Web Wrap
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

comments powered by Disqus