CCEA clears 5% stake sale in Neyveli Lignite

The Cabinet today cleared government's 5% stake sale in Neyveli Lignite (NLC), which would help garner around Rs 466 crore to the exchequer.

"The Cabinet Committee on Economic Affairs (CCEA) has cleared 5% stake sale of Neyveli Lignite through an offer for sale," sources said.

Department of Disinvestment (DoD) had moved Cabinet seeking sale of over 7.8 crore shares, or 5%, through an offer for sale (OFS) route in the Tamil Nadu-based miner.

Shares of Neyveli Lignite (NLC) today were trading at Rs 59.80, up 3.64%, on the BSE. At the current market price, the stake sale could fetch around Rs 466 crore to the exchequer.

The CCEA had earlier this month deferred a decision of stake sale in NLC.

Tamil Nadu Chief Minister Jayalalithaa had last month written to Prime Minister Manmohan Singh, opposing disinvestment in the integrated mining-cum-power generating company.

She had said divestment in the company would lead to labour unrest and disruption of power supply from Neyveli.

The disinvestment department had communicated to the CCEA that there is no other option but to divest the stake in the company as it is the only way to make the company compliant with the minimum public shareholding norm.

Sebi has set a deadline of August 2013 for all listed central public sector units to have a minimum 10% public shareholding.

Jayalalithaa had suggested delisting of Neyveli Lignite or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule.