BS reported that Neyveli Lignite Corporation has opposed the Union government’s move to offload 10% stake in the company citing unfavorable market conditions and a possible backlash from workers’ unions.
NLC said that every disinvestment move is primarily undertaken to mobilize targeted resources in the Budget and considering the present adverse market conditions the proposed disinvestment may not fetch the expected quantum.
The ministry had sent on a finance ministry proposal for 10% stake sale to the company’s board. The government holds 93.5% of equity in the company which is listed on the Bombay Stock Exchange. It had divested 6.44% equity in the past.
NLC has an authorized capital of INR 2,000 crore and an equity capital of INR 1,677 crore. The company was accorded Navratna status this April. Once this is done the rule is that at least 10% of the government’s stake in a company has to be offloaded within three years. The company was listed on the BSE a decade earlier.
However, the company has expressed reservations, arguing its shares have been taking a beating at the bourses. In 2010 to 2011, the share’s highest price quoted was INR 180.65 in October 2010 and the lowest price of INR 91.60 was quoted in February 2011. Presently it is quoting at around INR 75.
The government’s plan to dilute equity in NLC in 2006 had met with stiff opposition from its coalition partner, the DMK. Other Tamil Nadu parties such as the AIADMK and PMK are opposed to any further sell off too in the state-based company. Trade unions had gone on strike opposing the plan.
The NLC board has also said it is in no need of fresh equity, as it had surplus reserves. The reserves are being used in a planned manner for new and expansion projects. So, there was no need to raise any fresh equity from the market till the end of the 12th Plan.
NLC has 4 open cast lignite mines with a capacity of 30 million tonnes per annum. It has planned to add another 13 million tonne in a few years. The company also produces 2,740 MW of power annually from 4 power plants. It is setting up power plants of another 7,000 MW capacity across the country.
(Sourced from www.business-standard.com)
