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Govt approves 10% stake sale in Coal India through the offer for sale mechanism

19 Nov 2015 Evaluate

In order to bridge the yawning revenue gap and meet the disinvestment targets, the Union Cabinet has approved a 10 per cent stake sale in Coal India (CIL), one of the country's highest dividend paying companies. The government is facing ignominy of missing the disinvestment target for the sixth year, with so far raking up just 18 per cent of the Rs 69,500 crore disinvestment target in the current fiscal.


The stake sale in Coal India will be carried out through the offer for sale mechanism, the timing of which will be decided by the finance ministry.  At the current market price, a 10 per cent stake sale could fetch around Rs 21000 crore. This would still be lower than the Rs 22,600 crore that the Centre raised in the last financial year from a 10 per cent sale in the public sector behemoth. It was the largest single stake sale of a public sector firm by the government ever. The government is in the process of appointing merchant bankers for stake sale in Coal India, in which it currently holds 78.65% share.

For the current financial year, the government has budgeted to raise Rs 69,500 crore through disinvestment. Of this, Rs 41,000 crore is to come from minority stake sale in PSUs and the remaining Rs 28,500 crore from strategic stake sale. For April- October month of the ongoing fiscal, the government has been able to raise Rs 12,600 crore through stale sale in four PSUs as volatile market conditions have dented disinvestment plans. For disinvestment in 2015-16, the government has a pipeline of over 20 PSUs for which it has the Cabinet approval. These include 10 per cent stake sale each in OIL, Nalco, NMDC, and 5 per cent each in NTPC, ONGC and BHEL.

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