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Coal India Plans to Offer 92.44 Lakh Shares to Eligible Employees Through OFS

OFS by Coal India to Involve 92.44 Lakh Shares for Sale to Eligible Employees

Coal India to Offer 92.44 Lakh Equity Shares to Eligible Employees at Rs 226.10 per Share

Coal India, the state-owned coal major, has announced its plans to sell up to 92,44,092 equity shares to eligible employees through an Offer for Sale (OFS). The shares, with a face value of Rs 10 each, will be offered at a price of Rs 226.10 per share. The employee OFS will be open for subscription from June 21 to June 23. This move comes as the government of India aims to reduce its stake in the company, which currently stands at 66.13%.

Earlier this month, the government successfully raised Rs 4,185 crore by selling a 3% stake in Coal India through an OFS. Following this transaction, the government’s stake in the company has decreased to 63.13%. The OFS received overwhelming response from both institutional and retail investors, indicating strong market interest in Coal India.

In the financial results for the March 2023 quarter, Coal India reported a consolidated net profit of Rs 5,527.62 crore, showing a 17.7% decline compared to the same period last year. However, the consolidated revenue for the quarter increased by 17.3% to Rs 35,161.44 crore. This growth was primarily driven by the increase in coal prices under the fuel supply agreement, which rose by 5% year-on-year to Rs 1,550 per tonne.

Coal India holds a dominant position as the largest producer of thermal coal for the power sector, fulfilling around 75-80% of the fuel requirements. The demand for coal is rising due to the increased power needs for rural electrification.

Although Coal India shares have seen a 1.20% surge this year, on June 19, they closed 0.46% lower at Rs 227.50 on the Bombay Stock Exchange (BSE).

Coal India, a state-owned coal major, has unveiled plans to offer up to 92,44,092 equity shares to eligible employees through an Offer for Sale (OFS). Priced at Rs 226.10 per equity share and with a face value of Rs 10 each, this move aims to provide an opportunity for employees to acquire ownership in the company. The employee OFS will be open for subscription from June 21 to June 23, allowing eligible employees to participate in the offering.

This initiative comes as part of the government’s efforts to reduce its stake in Coal India. As of March 2023, the government held a 66.13% stake in the company, while the public shareholding accounted for the remaining 33.87%. The recent OFS by the government, in which it sold a 3% stake, successfully raised Rs 4,185 crore. Consequently, the government’s stake has reduced to 63.13% in Coal India.

In terms of financial performance, Coal India reported a consolidated net profit of Rs 5,527.62 crore for the March 2023 quarter. This figure reflects a decline of 17.7% compared to the corresponding period of the previous year. However, the company’s consolidated revenue witnessed a positive growth of 17.3%, reaching Rs 35,161.44 crore. This increase was primarily driven by higher coal prices under the fuel supply agreement, which rose by 5% year-on-year to Rs 1,550 per tonne.

Being the largest producer of thermal coal for the power sector, Coal India plays a crucial role in meeting the significant demand for fuel in the industry. Approximately 75-80% of the power sector’s coal requirements are fulfilled by the company, emphasizing its dominant position in the market. The surge in coal demand can be attributed to the rising need for power, particularly for rural electrification projects.

Despite the positive developments, Coal India’s share price experienced some volatility. While the stock has registered a year-to-date increase of around 1.20%, on June 19, it closed 0.46% lower at Rs 227.50 on the Bombay Stock Exchange (BSE). The fluctuation in share price reflects the dynamic nature of the stock market and investors’ reactions to various factors influencing the industry and the company’s performance.

Overall, Coal India’s decision to offer equity shares to eligible employees through an OFS demonstrates the company’s commitment to fostering employee engagement and providing opportunities for ownership. This move also aligns with the government’s strategy to reduce its stake in the company, while further diversifying the shareholder base. As the demand for coal continues to grow, Coal India is well-positioned to play a pivotal role in meeting the energy needs of the power sector in India.

Also read this article: Continued Soaring Costs of Milk and Rice Persist Despite Declining CPI Inflation Rates


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