A day after the Cabinet approved divestment in Coal India, the Coal Ministry on Wednesday said it is considering a 10 per cent further equity dilution in Neyveli Lignite Corporation, a move which may mobilise about Rs 2,400 crore for the Exchequer.
“The department of disinvestment has suggested further disinvestment in Neyveli Lignite Corporation (NLC) of up to 10 per cent and the same is under our examination,” Coal Minister Sriprakash Jaiswal told PTI here.
The government holds 93.56 per cent stake in the coal PSU which is listed on the Bombay Stock Exchange. It had divested 6.44 per cent equity in the past.
The NLC counter closed flat at Rs 154 on the BSE on Wednesday on a day the broader market too saw tepid activities. At today’s closing price, the government can raise about Rs 2,400 crore from a 10 per cent stake sale. However, the final amount would depend on the issue price of the follow-on public offer.
Senior Coal Ministry officials said the government can at least divest 3.56 per cent stake in the company to make 10 per cent of its holding public.
The government’s plan to dilute its equity earlier in 2006 had met with stiff opposition from its ally DMK. Tamil parties like AIADMK and PMK are opposed to any further selloff in the Tamil Nadu-based company. Trade unions had gone on strike opposing the divestment plan.
NLC is a lignite-based power producer and has an installed capacity of 2,490MW and it plans to augment this capacity to about 4,300 MW by 2012.
The company recently commissioned a 125 MW lignite-based power plant at Barsingar, Rajasthan. It plans to further take up its capacity to 250 MW. NLC plans to set up two more projects of 250 MW capacity each in the State.
The company’s projects under execution include a 1,000 MW project in Tuticorin, Tamil Nadu, a 500 MW extension of the Neyveli plant, and a 50 MW wind power project.
NLC registered a profit after tax of Rs 1,604.86 crore in FY10 compared to Rs 1,046.01 crore in the previous year.
On Tuesday, the government had cleared a proposal to divest an additional 10 per cent stake in CIL. The government has targeted to raise Rs 40,000 crore from divestment process this fiscal. So far, divestment in Satluj Jal Vidyut Nigam has fetched the government over Rs 1,000 crore.
The government is likely to further dilute its stakes in 10 PSUs, including MMTC, SAIL and RINL this fiscal. Last fiscal, it had raised Rs 25,000 crore through stake sale in Oil India, NTPC, NMDC and REC.