Black gold: Coal India IPO marks a watershed
The biggest thing about the Coal India initial public offering (IPO) is not its size - the largest ever from an Indian company - or its hotly-debated price band.
By ET Bureau |
The biggest thing about the Coal India initial public offering ( IPO) is not its size — the largest ever from an Indian company — or its hotly-debated price band —.Rs225-245 — as much as the fact that it is happening at all. Consider. The UPA government has not been particularly enthusiastic about disinvestment; barring the last fiscal when disinvestment proceeds crossed .Rs25,000 crore as against a target of just.
Rs1,120 crore, it has consistently fallen short of the target set. Coal is a strategic industry. CIL is headquartered in Kolkata, the bastion of anti-reformers. It has more than four lakh employees, most of them steeped in anti-disinvestment culture.
The fact that 1% of the offer has been reserved for the employees of CIL and its eight subsidiaries, and that employees as well as retail investors will get a 5% discount might have acted as a sweetener. But it is more than that. The happy reality is that disinvestment is no longer the contentious issue that it used to be in the past.
And that is excellent news. Not only because it means the government can push ahead with much greater vigour on disinvestment but also because public sector monoliths can now benefit from the greater professionalism that private ownership of capital brings in its wake. On that count, the CIL issue marks a watershed in the disinvestment debate.
At the proposed price band, the issue is expected to raise between .Rs14,200 crore and .Rs15,475 crore, i.e., more than a third of the government’s disinvestment target of.Rs40,000 crore. The government has already raised .Rs2,000 crore from a sale in Satluj Jal Vidyut Nigam Limited and Engineers India Limited (EIL) and another six issues are slated for this fiscal.
So, we are likely to comfortably achieve the target. Despite its notoriously lethargic ways, CIL has much going for it as the largest coal-mining company globally, as also one of the low-cost producers. But it was handicapped both by political interference and its public sector mindset.
Hopefully, both will be mitigated, even if not eliminated, so that CIL can emerge from the shackles of the past and reward both its new owners (those who subscribe to the IPO) as well as its old ones — the taxpayers of this country who have long been given a raw deal by the company.
Rs1,120 crore, it has consistently fallen short of the target set. Coal is a strategic industry. CIL is headquartered in Kolkata, the bastion of anti-reformers. It has more than four lakh employees, most of them steeped in anti-disinvestment culture.
The fact that 1% of the offer has been reserved for the employees of CIL and its eight subsidiaries, and that employees as well as retail investors will get a 5% discount might have acted as a sweetener. But it is more than that. The happy reality is that disinvestment is no longer the contentious issue that it used to be in the past.
And that is excellent news. Not only because it means the government can push ahead with much greater vigour on disinvestment but also because public sector monoliths can now benefit from the greater professionalism that private ownership of capital brings in its wake. On that count, the CIL issue marks a watershed in the disinvestment debate.
At the proposed price band, the issue is expected to raise between .Rs14,200 crore and .Rs15,475 crore, i.e., more than a third of the government’s disinvestment target of.Rs40,000 crore. The government has already raised .Rs2,000 crore from a sale in Satluj Jal Vidyut Nigam Limited and Engineers India Limited (EIL) and another six issues are slated for this fiscal.
So, we are likely to comfortably achieve the target. Despite its notoriously lethargic ways, CIL has much going for it as the largest coal-mining company globally, as also one of the low-cost producers. But it was handicapped both by political interference and its public sector mindset.
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Hopefully, both will be mitigated, even if not eliminated, so that CIL can emerge from the shackles of the past and reward both its new owners (those who subscribe to the IPO) as well as its old ones — the taxpayers of this country who have long been given a raw deal by the company.
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