CIL open to release INR 15000 crore from cash reserves

Wednesday, 23 Nov 2011

BS reported that Coal India Ltd said it was open to utilization of up to a fourth of its cash reserves, about INR 15,000 crore, for purposes other than capital expenditure if asked by the government, its main shareholder.

Mr NC Jha chairman of CIL said that "The government wanted to know how much cash reserves we have. We will have cash reserves of INR 60,000 crore by March, 2012. We have also indicated to retain three fourths of it for our development and CAPEX requirements.”

The government had sought to ascertain the cash position of PSUs as part of efforts to explore all available options to raise money and reduce the fiscal deficit.

In this regard, it seems likely that the disinvestment target of INR 40,000 crore for 2011-12 will not be met due to sluggish capital market conditions.

However, the Finance Ministry has asserted that it is weighing several options to meet the PSU stake sale target despite uncertainty in the stock market.

The government is considering various options, apart from the public offer route, to achieve the disinvestment target for the fiscal by way of share buy-back, private placement of shares or asking cash-rich PSUs to buy equity in their peers.

In this respect, CIL is willing to release up to INR 15,000 crore by March, which may be used for either a share buy back or a special dividend.

At present, CIL has close to INR 49,000 crore of cash reserves.

(Sourced from BS)