nagpur :- CIL delays plan to give shares to PAPs

 Coal India  Limited`s (CIL) initial public offer (IPO) is expected to hit the market in mid-October, so this public sector undertaking has delayed plans to offer a `stock option` to land owners if their property is acquired for mining projects.

Earlier, CIL`s chairman-cum-managing director PS Bhattacharya had gone on record at several forums, saying that there was a plan to reserve a portion of shares for project affected persons (PAPs), along with the employees. This was intended to enhance the compensation package, by making these PAPs part of the benefits from the company`s market capitalisation. However, as the IPO approaches, the company is finding it difficult to implement the plan due to legal issues.

Bhattacharya told newspersons that the move has been put on hold at present. He was in the city to inaugurate a service centre by Bharat Earth Movers Limited (BEML), which supplies equipment to CIL. "It involves a tricky issue related to company laws," he said.

CIL wanted to offer shares to future PAPs, as the existing ones have already got a compensation package. These shares were to be allotted from the 10% equity to be disinvested now. For this, a specific quantum of shares would have to be transferred to a different entity, such as a trust, during the IPO itself. CIL itself cannot keep these shares, since the company itself cannot purchase its shares, said a CIL official.

The official said the question now is who would fund this trust to hold shares to be transferred to the PAPs. The trust will have to pay for the shares which will be transferred to its name and the question is who will foot the bill.

"As and when land is taken over, PAPs will pay the trust to get the shares transferred to their name. A suitable solution will have to be worked out, after which the PAPs may also get a portion of CIL`s equity, but it won`t happen at present," said Bhattacharya.

CIL will be setting aside 63 lakh shares for its employees, which amounts to 1% of the company`s equity capital, being offered at 5% discount. However, the CMD admitted the unions did not appear to be keen on encouraging employees to subscribe to the issue.

"Talks are under way with the trade unions for that. The unions are apprehensive about the disinvestment process, as they fear there would be further dilution of stake in the future. However, it would not be so as the government has clarified that PSUs need not have more than 25% public float," said Bhattacharya.