Coal India hits five-month low on govt stake sale plan
MUMBAI (Reuters) - Shares of Coal India(COAL.NS), the world's largest coal miner by output, tumbled to a more than five-month low on Monday after government sources said the Indian government was planning to sell a 10 percent stake in the company.
The government plans to sell the stake in the next fiscal year, which starts on April 1, although it has not finalised a time frame or method for the sale, said the sources, who declined to be identified because they are not authorised to speak to news media.
Coal India shares ended down 5.5 percent at 302.30 rupees after falling as low as 299.95 rupees, their lowest since October 5. The Economic Times, which first reported the news, said the government was "quickly pushing ahead" with the sale.
Coal India officials could not immediately be reached for comment.
At the current price, a 10 percent sale in the company could fetch the government about $3.5 billion.
The stake sale would be part of the government's efforts to raise 400 billion rupees in 2013/14 through stake sales in state companies to cut down on the fiscal deficit.
New Delhi has raised $4.1 billion from divestments so far this fiscal year, and could improve on that if a planned share auction in steelmaker SAIL(SAIL.NS) goes ahead this month.
For the next fiscal year, the government's divestment plans include stake sales in top state refiner Indian Oil Corp (IOC.NS) and a follow-on public offer in Engineers India Ltd (ENGI.NS).
The Coal India sale may take place through a follow-on public offer or a share auction, but a decision will be taken later, said one of the sources. He said the actual offer may be months away as several related issues need to be resolved first.
UK-based shareholder The Children's Investment Fund has demanded the state miner raise coal prices to international levels, and issue higher dividends. It has filed lawsuits against the company and its directors.
Coal India is also expected to face resistance from workers' unions if the government decides to cut its stake in the company.
Coal India debuted on stock markets in 2010 after a record $3.4 billion initial public offering. (Reporting by Rafael Nam and Prashant Mehra; Editing by Chris Gallagher)
- Tweet this
- Share this
- Digg this
Trending On Reuters
The recent market correction was overdue. A further correction would be an opportunity for those who missed the rally in the past few months. The markets could get a reality check next year and consolidate before the next big movement. I still believe PM Modi will not fritter away his mandate and deliver on his promise, albeit with a delay, writes Ambareesh Baliga. Article