The department of disinvestment (DoD) has extended the deadline to appoint financial advisors for Coal India (CIL) disinvestment to November 10, as it has failed to receive adequate response from merchant bankers. The first deadline was set on September 2, 2015, which was later extended to October 14.
People familiar with the development said global investment banks flagged concerns over a shortfall in Coal India’s environment sustainability commitments. In addition, there was lack of clarity regarding the group or basket under which CIL would feature. Bankers have sought more clarity on the matter, as it would have a bearing on the costs involved in conducting a government deal.
The DoD aims at appointing five merchant bankers, and has now facilitated meetings between merchant bankers and representatives of the company.
Coal India had in 2013 committed to a sustainable development policy under which the Maharatna PSU has to pursue mining, integrating environmental, sociocultural and economic factors.
“CIL has some sustainability plans that CIL committed in 2013. They have not been able to implement it. The foreign bankers have expressed concerns on that,” PTI quoted a senior government official as saying.
The Centre is looking to dilute 10% stake, representing 63.16 crore shares, in the world’s largest coal mining company, a move that would fetch the exchequer about Rs 21,100 crore at current rates. The government currently holds 78.65% stake in CIL.
In January 2015, the government offloaded 10% stake in the company that helped raise Rs 22,557 crore. CIL went public by selling 10% stake and raised Rs 15,200 crore through its initial public offering (IPO) in November 2010, the biggest IPO ever.
Experts said sale of stake in CIL is crucial for the government to achieve its FY16 disinvestment target of Rs 41,000 crore. So far, the Centre has raised Rs 12,701.33 crore by selling stake in Indian Oil Corp, Power Finance Corp, Rural Electrification Corp, and Dredging Corp of India, according to statistics compiled by the DoD.
On Tuesday, shares of CIL fell 0.92% or R3.10 to settle at R334.90 on the BSE.