Cabinet defers CIL, HCL stake sale

The government is likely to take a call on the much-talked about divestment in Hindustan Copper next week, after the Cabinet deferred a decision on the same along with that of Coal India today, Mines Minister B K Handique said.

"The Cabinet today deferred the stake sale proposals in Hindustan Copper and Coal India. However, it is likely to take a decision on about 20 per cent stake sale in Hindustan Copper next week," Handique told PTI.

Handique said his ministry is looking for an early divestment in HCL to utilise the proceeds in its Rs 4,200 crore (Rs 42 billion) expansion programme.

"We are looking at early divestment to utilise the proceeds for expanding the existing mines and reopening of closed mines," the minister said.

HCL is one of the major copper producers and copper ore miners in the country. The divestment and fresh equity issue is likely to fetch Rs 4,000 crore, half of which will go to the government.

Handique said HCL does not want to go in for borrowings to fund expansion. "Debt is not being considered an option at this stage as most of the mining programmes have long gestation and debt-servicing will erode profitability of the company," he said.

The company plans to raise its copper ore production from 3.15 million tonne per annum (mtpa) to 12 mtpa and has plans to expand capacity of its mines and projects including the Khetri mines in Rajasthan), Malanjkhand Copper Project in Madhya Pradesh and Surda mines in Jharkhand.

HCL chairman and managing director Shakeel Ahmed had yesterday said the stake sale approval was likely to come before the Cabinet today and the the company was expected to file DRHP (draft red herring prospectus with the Sebi) by late July.

The government currently holds 99.59 per cent stake in HCL and its holding would get diluted by 18.44 per cent post-stake sale.

Handique did not elaborate on the CIL divestment, as it comes under the coal ministry. The government plans to divest 10 per cent stake in the coal major through a public offer to mobilise about Rs 12,000 crore (Rs 120 billion).

Earlier, Coal Minister Sriprakash Jaiswal had said CIL issue might hit the markets by July-August. Later, he said the timing of the offer would depend on the market conditions and the issue may come by September.

The government has targeted to raise Rs 40,000 crore (Rs 400 billion) from divestment this fiscal. So far divestment in Satluj Jal Vidyut Nigam fetched Rs 1,000 crore (Rs 10 billion) to the government.

The government is likely to sell its stake in 10 companies it owns, including MMTC, CIL, SAIL and RINL this fiscal. Last fiscal, it had raised Rs 25,000 crore (Rs 250 billion) through stake sale in Oil India, NMDC, REC and NTPC.