NEW DELHI: The government has approved 10% stake sale in Coal India and initial public offer of Cochin Shipyard, restarting the disinvestment programme that had been put on hold in a weak market.
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. Coal India’s scrip closed at Rs 334.95 on the Bombay Stock Exchange on Wednesday, up 0.83% from its previous close. At this price, 10% stake sale in the state-run monopoly miner will fetch over Rs 21,000 crore.
“The cabinet has approved both the stake sale proposals. The timing will be decided by the finance ministry,” said Piyush Goyal, minister of state for coal, power and renewable energy.
Industry lobby CII said in a statement: “The major decisions of the Cabinet Committee on Economic Affairs (CCEA) to disinvest 10% stake in Coal India Limited and make initial public offering for Cochin Shipyard Ltd send out the right signal that the government is fast-tracking reforms.”
Cochin Shipyard will offload 3.4 crore equity shares in the IPO, with a fresh issue of 2.26 crore equity shares and sale of 1.13 crore shares by the government.
The company’s net profit more than doubled to Rs 235 crore in 2014-15 from Rs 94 crore in 2005-06, while its turnover increased five times to Rs 1,859 crore during this period.
In a statement, the government said that the fresh shares are being issued by Cochin Shipyard to part-finance various areas for expansion in short and medium terms, including setting up of an international ship-repair facility at Cochin Port Trust area and setting up of a large dry dock to take up construction of larger ships.
The government is in the process of appointing merchant bankers for stake sale in Coal India, in which it currently holds 78.65% share.
The Centre has so far divested part of its stake in Power Finance Corporation, Rural Electrification Corporation, Dredging Corporation of India and Indian Oil Corporation, raising about Rs 12,600 crore, a third of its ambitious Rs 41,000 crore disinvestment target for the year.
The balance Rs 28,500 crore of the Rs 69,500 crore targeted from disinvestment is to come through strategic sale of government-run companies for which a parallel process has been initiated.
The government recently closed down the Board for Reconstruction of Public Sector Enterprises in order to streamline the multiple mechanisms for the revival of sick central public sector enterprises.
There were 71 loss-making staterun companies in 2013-14, with aggregate losses of over Rs 20,000 crore.
Read full article: Economic Times