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Monday, June 24, 2013

Neyveli Lignite Corporation (NLC) Disinvestment


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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