CIL floor price fixed at Rs.358

The stake sale opens on Friday

FILE - In this Jan. 7, 2011 file photo, people carry baskets of coal scavenged illegally at an open-cast mine in the village of Bokapahari in the eastern Indian state of Jharkhand where a community of coal scavengers live and work. India's national auditor said Friday, Aug. 17, 2012, the government lost huge sums of money by selling coal fields to private companies without competitive bidding, adding to massive losses from dubious auctions of other state assets. The Comptroller and Auditor General’s report to Parliament estimated that private companies got a windfall profit of $34 billion because of the low prices they paid for the fields.(AP Photo/Kevin Frayer, File)

The government, on Thursday, fixed the floor price at Rs.358 a share for the stake sale in Coal India Ltd. (CIL). The offer for sale opens on Friday.

The government has the option of a divestment of up to 10 per cent, depending on the response to the initial five per cent on offer. Expectedly, the trade unions have given a thumbs down to this sale, which is expected to garner around Rs.22,000 crore to the exchequer if the 10 per cent sale goes through.

The government is selling 31.58 crore shares, or 5 per cent stake, in a public offer with an option to sell another 5 per cent through the offer for sale (OFS) or the auction route. CIL has reserved 20 per cent shares for retail investors, who will also get 5 per cent price discount. The company was listed through a record initial public offering (IPO) in November, 2010, raising Rs.15,199 crore. At the IPO price of Rs.245 a share, the issue was over subscribed 15 times. The price had zoomed to Rs.287.75 soon after listing.

Analysts, however, refused to read too much to this round of divestment, saying that this did not help small investors, as this was not a market transaction. “Entities like LIC will pick up a chunk of the shares,” an analyst said, speaking on condition of anonymity.

Symbolic protest by trade unions

Trade unions said they would launch a ‘symbolic protest’ on the day of share sale before chalking out their future course of action. In a release issued here on Thursday, S. Q. Zama of INTUC said this move violated the assurances given to them by the Union Coal Minister on the basis of which the five-day strike by five Central TUs earlier this month was called off on the second day.

PTI reports from Mumbai:

Shares end over2 per cent lower

Shares of CIL ended over 2 per cent lower on Thursday, wiping out Rs.5,620.59 crore from its market valuation. After falling 5 per cent to Rs.364.60 in intra-day trade at the BSE, CIL shares ended at Rs.375.15, down 2.32 per cent from its previous close. At the NSE, it settled with a loss of 1.43 per cent .