The Telegraph
Wednesday , July 30 , 2014
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Bid to hasten Coal India selloff

New Delhi, July 29: The government is looking to deliberate next month on a possible selloff in Coal India.

It has already lined up sales in a clutch of PSUs, including Steel Authority of India Limited and ONGC, through the offer for sale route. The steel giant is likely to sell the government’s stake in September.

A committee of ministers will be formed soon to discuss issues such as pricing and the appointment of merchant bankers.

Besides, rump sales in Balco and Hindustan Zinc is on the agenda.

However, the real big disinvestment for the year will be Coal India Ltd, which will be taken up by the cabinet next month.

Even if the proposal is cleared, the selloff is unlikely before the last quarter of this fiscal.

The plan is to sell a 5-10 per cent stake. A 10 per cent sale could fetch Rs 24,500 crore, which will go a long way to meet the budget target of Rs 43,425 crore from stake sales.

The government owns about 89.65 per cent stake in Coal India, where any selloff plans have been vehemently opposed by unions.

However, the case for selloff will rest on the fact that state control will remain even after the exercise. Besides, the capital market regulator has ruled that at least 25 per cent in PSUs must be in the hands of non-promoters.

The sale of 5 per cent in SAIL, or about 20.65 crore shares, is expected to fetch about Rs 2,000 crore. The government, which currently holds 80 per cent in SAIL, will come out with the follow on public offer in September, said officials.

In ONGC, despite early objections by the board, plans are on for a 5 per cent sale. The government’s holdings in the oil and gas exploration giant stand at 68.94 per cent.

“The inter-ministerial group can now start the process of appointment of merchant bankers and other intermediaries to the issue since the draft cabinet note for disinvestment of 5 per cent paid up equity capital in ONGC has been approved by the finance minister,” a North Block note said.

The Centre has similarly planned to sell 10 per cent in Hindustan Aeronautics Ltd through an initial public offering worth Rs 2,500-3,000 crore in the third quarter of this year. Bangalore-based HAL is expected to fetch high valuation both from Indian and foreign investors as it is present in a niche segment in the defence business, with its collaboration with France’s Dassault in the manufacture of Rafale fighter jets being the showpiece project.

Top disinvestment ministry officials said the new government would abide by its predecessor’s decision to sell the residual stakes in Balco and HZL through the open market route.

Merchant bankers hope to complete the valuation of the residual stakes by September. The government currently holds 29.5 per in HZL and 49 per cent in Balco.

The government will also consider selling off a sick PSU — Tyre Corporation of India — this financial year, once court cases related to the sale are sorted out, officials said.