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Mining industry

Indian Government Approves Disinvestment of 10% Stake in Coal India Ltd and Hindustan Copper Ltd

Strategic Insights

— 2 min read

The Indian government has taken a significant step towards raising Rs 400 billion (US$8.6 billion) this fiscal year by approving the disinvestment of 10% each in Coal India Ltd and Hindustan Copper Ltd. The move, which is expected to generate about Rs 160 billion, was approved by the Cabinet Committee on Economic Affairs (CCEA) as part of the government's agenda to raise funds through stake sales in public sector units (PSUs). The disinvestment will involve an initial public offering (IPO) of 10% of Coal India Ltd's equity and a follow-on public offer of 10% of Hindustan Copper Ltd's stake, which will also involve a fresh issue of equity to the extent of 10% of the pre-issued paid-up capital.

Key Takeaways:

  • The Indian government approved the disinvestment of 10% each in Coal India Ltd and Hindustan Copper Ltd to raise Rs 400 billion (US$8.6 billion) this fiscal year.
  • The move is expected to generate about Rs 160 billion through an initial public offering (IPO) of Coal India Ltd's shares and a follow-on public offer of Hindustan Copper Ltd's stake.
  • The government will offload 10% of its equity in Coal India Ltd through an IPO, with 1% of the shares being offered to employees at a 5% discount.
  • Hindustan Copper Ltd will issue fresh shares equivalent to 10% of its pre-issue paid-up capital, with the government selling 10% of its stake in the firm through a follow-on public offer.
  • The disinvestment will reduce the government's holding in Coal India Ltd from 100% to 90%, while in Hindustan Copper Ltd, the government's holding will undergo a fresh issue of equity.
  • Coal India Ltd is the world's largest coal producer, accounting for over 85% of India's total coal production of 531.5 million tonnes.
  • The disinvestment is expected to happen within six months, with the Cabinet Committee on Economic Affairs (CCEA) approving a 5% price concession for retail investors to encourage greater public ownership of the public sector companies.

Statistics:

  • Rs 400 billion (US$8.6 billion) - the expected funds to be raised through stake sales in PSUs this fiscal year.
  • Rs 160 billion - the expected funds to be generated from the disinvestment of 10% each in Coal India Ltd and Hindustan Copper Ltd.
  • 10% - the percentage of equity to be offloaded by the government in Coal India Ltd through an IPO.
  • 1% - the percentage of Coal India Ltd's equity to be offered to employees at a 5% discount.
  • 4 lakh - the number of employees of Coal India Ltd and its eight subsidiaries who will be offered 1% of the equity at a 5% discount.
  • Rs 63.1636 billion - the total paid-up capital of Coal India Ltd.
  • 431.5 million tonnes - the output of Coal India Ltd in the last fiscal year.
  • 531.5 million tonnes - India's total coal production.
  • 5% - the price concession to be offered to retail investors in Hindustan Copper Ltd.

Sources:

  • "India approves disinvestment of 10% in Coal India and Hindustan Copper." (PTI)
  • "Cabinet clears disinvestment plan." (Asia Pulse)

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