The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, approved the disinvestment of 10 percent paid-up equity capital in Coal India Ltd. (CIL) out of the Government of India’s shareholding of 89.65 percent.

The decision to disinvest would help the Government to realize an optimum price for the offer for sale of 10 percent of the Government’s shareholding in the company.

Background:

CIL is a Public Sector Enterprise under the administrative control of the Ministry of Coal. Its objective is to produce and market the planned quantity of coal and coal products efficiently and economically, with due regard to conservation of resources, and safety and quality of life of the workforce.

The authorized capital of the CIL is ₹ 8904.18 crore (Rs. 904.18 crore of non-cumulative 10 percent redeemable preference shares plus ₹ 8000 crore of equity shares) of which the issued and subscribed equity capital as on 31.03.2014 is ₹ 6316.36 crore. The President of India holds 89.65 percent of the paid up capital in CIL. In accordance with the Government of India`s disinvestment policy, the Government has decided to disinvestment 10 percent equity of CIL out of its holding of 89.65 percent as per the Securities and Exchange Board of India (SEBI) Rules and Regulations. After this disinvestment, the Government of India`s holding in the company would come down to 79.65 percent.

Disinvestment of government equity: offer for sale of paid-up shares to reduce central shareholding under SEBI rules. Disinvestment of a portion of central government equity in Coal India Ltd. is approved to reduce government shareholding through an offer for sale of 10 percent of paid-up equity held by the Government, to be executed under the Government's disinvestment policy and in accordance with SEBI Rules and Regulations, with the aim of realising an optimum price.