The government’s buyback proposal in PSUs to meet divestment target has not found favour with Coal India (CIL), as the company does not see any benefit to itself.
“Coal India is not in favour of (buy-back proposal) as the company does not see any benefit from it,” a top official in the coal ministry said.
Under the buyback mode, the government mulls to raise funds directly by selling its equity in the company to the PSU itself.
In view of volatile stock market, the Department of Disinvestment (DoD) has mooted that proposal under which the government will raise funds by selling its equity back to the cash rich state-owned companies.
The DoD is seeking the views of different ministries on the buy—back proposal.
Last month, Coal Secretary Alok Perti had said that the ministry would be responding to the proposal after seeking views of the concerned company.
At present, CIL has close to Rs 49,000 crore of cash reserves which, according to estimates, is likely to reach Rs 60,000 crore by March, 2012.
Raising funds through the buy-back route is one the options being explored by the DoD to help the government achieve Rs 40,000 crore disinvestment target in the current fiscal.
Out of the target of Rs 40,000 crore, the government has so far raised on Rs 1,145 crore in the current fiscal.
Although the government prepared a long list of PSUs for disinvestment, they failed to hit the capital market in view of the volatile stock market conditions.
In order to pursue buy-back, the DoD has prepared a list of about two dozen PSUs having large surplus cash balance, which include CIL, Steel Authority of India, NMDC, Oil and Natural Gas Corp, NTPC, Oil India and MMTC.