On Friday June 21,2013,the Cabinet Committee on Economic Affairs (CCEA) approved
disinvestment of 5 per cent of the Centre’s equity stake in Neyveli
Lignite Corporation (NLC) through the OFS (Offer For Sale) route in
accordance with Securities and Exchange Board of India (SEBI)
regulations
Background
The Department of Disinvestment (DoD) had moved the CCEA seeking to
offload over 7.8 crore shares, or 5 % of the Centre’s holding in
the Tamil Nadu-based integrated mining-cum-power generating company
through OFS.
At current market prices, the stake sale in NLC is expected to fetch
about Rs.466 crore to the exchequer and also enable compliance of SEBI’s
norm stipulating 10 % minimum public holding in public sector
undertakings (PSUs).
NLC’s authorised capital stands at Rs.2,000 crore.
Of this, the issued and subscribed equity capital as at the end of March
2012 is Rs.1,677.71 crore comprising 167.771 crore equity shares of the
face value of Rs.10 each. After the disinvestment, the Centre’s holding
in the company will down to 88.56 %.The government currently holds 93.56% stake in Neyveli Lignite.
SEBI has set a deadline of August 2013 for all listed central public
sector units to have a minimum 10% public shareholding
Trade unions, TN Govt oppose Disinvestment
Neyveli Lignite Corp has informed the Coal Ministry that Tamil Nadu
government and employee unions are opposing the proposal to divest 5 % stake
Political parties in TN Call for withdrawal of Disinvestment in NLC
DMK President M. Karunanidhi appealed to the Union
government to cancel the decision in deference to his earlier requests
and the suggestions made by Chief Minister, Jayalalithaa, in her letter
to the Prime Minister on May 23. Quoting from his
letter of May 26 to his party cadre, the DMK leader said that the move
to disinvest in NLC, a Navaratna public sector undertaking, would mean
antagonising the people of Tamil Nadu unnecessarily.
MDMK General Secretary Vaiko wondered what the government would achieve by realising Rs 466 crore
from the proposed disinvestment in an undertaking that generated an
annual profit of Rs 1400 crore. The real intention, he alleged, was to
privatise NLC progressively
The State unit of All India Trade Union Congress (AITUC) criticised the
Union government for going back on its promise of not resorting to
disinvestment in profit-making PSUs, made in the Common Minimum
Programme. General secretary T. M. Murthi strongly criticised the
decision in spite of its protest and appeals made by the former and
present Chief Ministers
TN CM J Jayalalithaa urged for a rethink on the disinvestment decision cleared by the Cabinet
Committee on Economic Affairs overlooking the concerns of a negative
fallout and rejecting the alternatives that had been suggested in her
letter of May 23 - that Neyveli Lignite be delisted after buying back
the 6.44 per cent public stake or the Securities Contracts (Regulation)
Rules, 1957, amended to give a special exemption for NLC. Also J Jayalalithaa slammed the Centre’s decision to divest five per
cent stake in the Neyveli Lignite Corporation (NLC) which, she said,
showed that “signalling to the financial markets had taken precedence
over the welfare of thousands of workers and concerns of the people of
Tamil Nadu.”.The Chief Minister, in a letter to the Prime Minister Manmohan Singh,
said, “The Central government’s hasty and poorly reasoned actions have
left the Government of Tamil Nadu facing entirely avoidable potential
labour unrest which could further exacerbate the difficult power
situation in the State,”
CPI(M) State secretary G. Ramakrishnan said the Centre’s justification that
the money from disinvestment would be used for welfare schemes could not
be accepted as it had provided tax cuts worth Rs. 5.75 lakh crore to
MNCs and large corporates in this year’s budget
TN Govt ready to pick up 5 % stake in NLC
The TN Govt. is ready to buy the five per cent stake that
the Centre is planning to shed in the Neyveli Lignite Corporation (NLC)
through one or more of its public sector undertakings, Chief Minister
Jayalalithaa said on Tuesday June 25,2013
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