Giving a major fillip to the government’s disinvestment plans, the Union Cabinet on Wednesday approved a 10 per cent stake sale in Coal India (CIL) and initial public offering (IPO) of Cochin Shipyard Ltd (CSL). “The government has approved sale of 10 per cent stake in Coal India,” Coal & Power Minister Piyush Goyal told reporters after the Cabinet meeting. Asked about the government’s expectations from the stake sale in the CIL, Goyal said it would mop up around Rs 20,000 crore.
At current market capitalisation, a 10 per cent stake sale could fetch Rs 21,137.71 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.
This slight drop shows that the stock markets remain weak and, in spite of the disinvestment department’s best efforts, the revised estimates for 2015-16 are expected to fall well short of the budgeted estimate of Rs 69,500 crore.
The government holds 79.65 per cent stake in Coal India. CIL workers’ unions, however, have been opposing the stake sale in the national miner.
With seven months of FY16 over, the government has been able to raise Rs 12,600 crore through stake sale in four public sector firms as volatile market conditions have dented disinvestment plans.
The Cabinet has also approved the proposal for issue of an IPO of CSL. According to an official statement, the approval is for the public issue consisting of 33,984,000 equity shares of Rs 10 each amounting to an equity capital of Rs 33.98 crore of CSL. The IPO will consist of fresh issue of 22,656,000 equity shares and sale of the government’s stake in CSL worth 11,328,000 equity shares of Rs 10, through a public offering in the domestic market. The fresh shares are being issued by CSL to part-finance its expansion, which includes setting up an international ship-repair facility at Cochin Port Trust area and establishing a large dry dock within the CSL premises to take up construction of larger ships such as aircraft carriers, as well as to take up underwater repairs to rigs and semi-submersibles.
The statement said the IPO would raise resources for the government due to the sound financial condition of CSL. There would be no financial outgo from the government on account of the issue of shares. Instead, the government would earn revenue due to sale of its shares to the public, it said.
CABINET & CCEA’S OTHER DECISIONS
- Days after the terror attacks in Paris, Cabinet gave nod for time-bound completion of a project to synchronise databases of security organisations across the country, called the Crime and Criminal Tracking Network Systems
- Currency swap facility for SAARC members, under which RBI offers the facility of varying sizes, not exceeding $2-billion in total
- To fast-track nuclear power projects, Cabinet clears a proposal to amend the Atomic Energy Act to enable Nuclear Power Corporation of India Ltd to enter into JVs with other public sector units
- Land swapping between D-G of lighthouses & lightships and JSW Jaigarh Port Ltd at Jaigarh lighthouse in Maharashtra
- German as an additional language in Kendriya Vidyalayas
- Revised Air Services Agreement between India and New Zealand
- Ratification and submitting of the Articles of Agreement of Asian Infrastructure Investment Bank
- A protocol amending the pact between India and Kuwait for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income
- Set a first-of-its-kind National Resource Facility for biomedical research at Genome Valley in Hyderabad for breeding animals required for research & development of various products
- A proposal to extend for five years an economic assistance programme, IDEAS, under which line of credit is provided to African and other developing nations. To have a financial implication of about Rs 3,771.77 crore
- Signing of a tripartite agreement among India, Brazil and South Africa on a fund for alleviation of poverty and hunger