According to a Finance Ministry draft proposal obtained by Bloomberg News, the government plans to sell a 5% stake to the public and a similar holding to the company.
The news gave the world’s biggest coal producer its biggest share gain in almost a year.
India has the widest budget deficit among major emerging economies and in the year ended March 31 the government has been selling stakes in companies including NTPC, NMDC and Oil India for about 240 billion rupees to shrink the deficit, pay for subsidies and invest in public works.
Coal India’s employees plan to go on an indefinite strike should the government proceed with the share selling plan, according to Bloomberg News.
The workers will “vehemently oppose” any such decision, the ruling Congress Party-backed Indian National Mineworkers Federation secretary general SQ Zama said, citing a memo to Coal Minister Sriprakash Jaiswal.
A day’s strike in Coal India may lead to a production loss of about 1.2 million metric tons, Bloomberg reported.
Coal India also released a statement this week announcing that it had missed its supply target for the fiscal year 2012-13 by 4.8Mt.
The company, which produces about 80% of India's coal output, reported offtake of just more than 465Mt for the year, falling short of its target of 470Mt.
The company also missed its production target of 464.1Mt for the year by 11.9Mt, it said.
Despite the controversy surrounding the company, there is whispering that it is eyeing Rio Tinto’s Australian coal mines.
“We have received three offers for some Australian coal mines from merchant bankers, including those representing Rio Tinto,” a Coal India official told DNA.
“Our foreign acquisition committee is considering those offers.”
Rio Tinto is seeking to sell its share of the Clermont and Blair Athol coal operations in Queensland and part of its New South Wales coal operations to raise $1 billion to help reduce debt.
The move is part of a concerted push to get the global resources giant back into profitability under new chief executive Sam Walsh.
It recorded a $3 billion loss for the six months to December.
The company has appointed Deutsche Bank to handle the sale, according to the Wall Street Journal.
