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Monday, January 18, 2016

Coal India’s 10% stake sale may spill over to next yr

The 10 per cent stake sale in Coal India is likely to be deferred to next fiscal as the government wants to wait for stability in the equity markets for a better valuation, as per the media reports.

"If we don't get the right price, we may not sell government shares in CIL this fiscal," an official told PTI.

Coal India shares are currently trading at Rs 318.20 a share, resulting in a notional loss of over 11% to investors who purchased the equity at Rs 358 apiece in the disinvestment on January 31, 2015.

At current market price of Rs 318.20, sale of 63.16 crore shares, or 10 per cent stake, would bring in around Rs 20,000 crore to the exchequer.

The government had last sold 10 per cent in the blue-chip on January 31, 2015, at the floor price of Rs 358 apiece and garnered Rs 22,557 crore.

Foreign investors such as Fidelity, Wellington Management and BlackRock have already conveyed to the disinvestment department their reservations over Coal India stake sale at the current juncture as the stock is already beaten down.

Government has already shortlisted five Indian merchant bankers-- JM Financial, SBI Capital and ICICI Securities, Axis Capital and Kotak Mahindra Capital -- for managing Coal India stake sale.

In November last year, the Cabinet approved 10% stake sale in Coal India.

The government currently owns 79.65 per cent in maharatna PSU Coal India.

The stock market slump has wiped away investor wealth across spectrum, including metals and mining stock as global commodity prices have declined significantly.