CIL IPO staff quota may remain unsubscribed

The ongoing initial public offering (IPO) of Coal India (CIL), the country’s biggest ever, is unlikely to evince much interest from its 400,000-strong workforce, despite about 10 per cent of the 631.6 million shares on offer being reserved for the employees.

“We were aggressive, but it (the employee subscription) will definitely fall short,” CIL Chairman Partha S Bhattacharyya said here today. He was responding to a question on the possible involvement of the employees of CIL’s eight subsidiaries that together form the world’s largest coal mining company. The employee quota in a number of recent issues of state-owned companies was not fully subscribed.

However, the impact may be minimal, as the unsubscribed portion will be allocated to qualified institutional buyers, high net worth individuals and retail investors.

The tussle among the trade unions, the miner and the coal ministry, Bhattacharyya said, could have led to fewer workers subscribing to the issue, slated to raise over Rs 15,000 crore.

In April, three of the five registered trade unions signed a joint note supporting the IPO provided certain clarifications were made, he explained.

Subsequently, trade union representatives met Finance Minister Pranab Mukherjee to seek assurance on the percentage of equity to be divested. In spite of this, Bhattacharyya said, unions continued to oppose the offer.

“The finance minister promised the unions that nothing more than 10 per cent will be divested and that too so that we won’t lose our Navaratna status,” he said. According to the norm, a company has be list within three years of getting the Navaratna status to retain the tag.

“It is something we are not happy with, as participation of employees was highly desirable,” Bhattacharyya said. Incidentally, the department of divestment had made a successful plea to the market regulator, the Securities and Exchange Board of India, to allow employees of subsidiary companies to subscribe to shares in the holding company, with specific reference to CIL.

Disinvestment Secretary Sumit Bose refrained from expressing disappointment at the possible lackluster response from the CIL workforce. “The employee response can be determined only after the issue closes, but in certain cases, there can be problems. The employees are often in far-flung places, and many are not financially literate.”