New Delhi, June 15 (IANS) The government Tuesday approved 10 percent divestment of its shares in Coal India and allowed another state-run company Hindustan Copper to issue 10 percent fresh equity to the public to raise money towards capital expenditure.
The decision, that also calls for the government to divest 10 percent stake in Hindustan Copper along with a fresh equity issue, was taken at a meeting of the Cabinet Committee on Economic Affairs, presided over by Prime Minister Manmohan Singh.
‘The equity in Coal India will be sold through the book building process in the domestic market,’ said Home Minister P. Chidambaram, who briefed reporters here after the cabinet meeting.
‘One percent equity of Coal India will be offered to the company’s employees and eight subsidiaries,’ he said, adding that the employees and the company’s subsidiaries will be given a 5 percent discount to become stakeholders.
A similar concession will also be given to retail investors to encourage greater public ownership of the public sector companies. After the divestment, the government stake in these companies will would come down to 90 percent.
A ‘navratna’ company engaged in producing and marketing coal and related products, Coal India’s paid up capital at present is Rs.6316.36 crore and the government of India holds the entire 100 percent stake in the company.
In the case of Hindustan Copper, Chidambaram said there were two sets of approvals – one for the government to divest 10 percent equity out of its present shareholding of 99.59 percent and the other for the company to issue 10 percent fresh equity to raise capital.
Thus, the company will issue fresh equity of 92,521,800 shares of face value of Rs.5 each and the government will similarly disinvest 92,521,800 shares of the same face value.
Employees of the company and retail investors will be given a 5 percent discount on the price of shares. Hindustan Copper’s current paid up capital is Rs.462.61 crore.