The Government of India plans to reduce its stake in Coal India from 89.65% to 79.65% via the Offer For Sale (OFS) route. The government will sell 315.8mn shares or 5% stake, through an offer for sale, with an option to sell the same number of shares as a greenshoe option. The floor price for the OFS is Rs. 358 and will start on Friday 30th January ‘15. Government has doubled the quota for retail investors to 20% from the 10% mandated by SEBI and would also provide a 5% discount to retail investors.
Since coming to power, the Narendra Modi-led Government has emphasized a lot on power for all. In line with this, the power ministry has set a target of 1bn tons of coal production from Coal India by 2019 from ~500mn tons in FY15 to meet the rising demand from the domestic market.
There has been a lot of debate regarding the divestment in CIL, with workers from the various trade unions going on a strike to oppose the move. However, the five unions of Coal India Limited have called off the strike after cordial discussions with senior leadership of the company and the Ministry of Coal.
The trade unions have again threatened to go on a strike, also saying that they would reduce the production by a substantial amount.