Coal India (CIL) board, which met here on Monday, did not “formally discuss” the proposal for buyback of a part of the government’s stake by the company and the Centre’s demand for a special dividend to ramp up its non-tax revenue, company officials said.
The proposals, however, are learnt to have featured in informal discussions between the members and would be taken up at length by January-end/early February, when there will be more clarity on what the finance ministry wants.
“The two issues were not part of the agenda of today’s board meeting. We would wait for more finality on the buyback and special dividend schemes before taking it for company approval,” said the official privy to the development.
It is understood that while CIL, sitting on cash reserves of R62,000 crore, is not in favour of buying back government shares in the company, it wants to take views of all its subsidiaries by December 31 to finalise a timeline for the proposed special dividend. Sources said the proposal could be of paying CIL shareholders R20 per share as special dividend. For the government, which holds 90% in the company, this would mean an inflow of around R12,000 crore.
Under a proposal being worked by the department of disinvestment earlier, CIL is expected to buy back 5% of government shares, an exercise that may fetch the exchequer close to R8,000 crore. The exercise of this option along with payment of special dividend is considered important as these measures would generate proceeds similar to the R20,000 crore originally planned from a follow-on-public offer of 10% stake. The government targets to raise R40,000 crore from disinvestment proceeds this year, but has garnered only R1,325 crore.
Opposition from the workers union to an earlier proposal to divest 10% government equity through a follow-on public issue has left little option for the government.