Shares of state-owned Coal India extended fall for the second straight session and tumbled nearly 5% in opening trade on Thursday after the central government proposed to sell 3% stake in the world’s largest coal mining company, which is expected to fetch around ₹4,000 crore to the exchequer. The government, which holds 66.13% stake in the company, will offload the share via an offer-for-sale (OFS) at ₹225 per share, a discount of 6.7% to Wednesday’s closing price. The counter settled 1.20% lower at ₹241.20 apiece on BSE in the previous session.

As per the exchange filing, the government plans to offload 9.24 crore shares, or 1.5% stake, in CIL. Adding to it, there will be a green shoe option for selling an equal amount of stake in case of over subscription.

The OFS will open on June 1 for non-retail investors and for retail investors on June 2. “Those investors other than Retail Investors ("Non-Retail Investors") who have placed their bids on T day and have chosen to carry forward their bids to T+ 1 day, shall be allowed to revise their bids on T+1 day as per the SEBI OFS Circular,” CIL said in a BSE filing on Wednesday.

Reacting to the news, Coal India shares opened 4.5% lower at ₹230.5 and slipped as much as 4.8% to ₹229.65 on the BSE. The market capitalisation dropped to 1.42 lakh crore.

The share price of Coal India is currently down nearly 13% from its 52-week high of ₹263.30 touched on November 9, 2022, whereas it trades 31.5% higher than its 52-week low of ₹174.60 hit on June 20, 2022.

On Tuesday, the board of CIL approved raising the prices of its high-grade (G2 to G10) non-coking coal by 8% with effect from May 31. This was the first hike in non-coking coal prices in the last five years since 2018, which will be implemented across all its subsidiaries.

The price hike is expected to generate incremental revenue of ₹2,703 crore for the balance period of financial year 2023-24, which will help the state-owned company to offset 50% higher employee cost post wage hike announced in January 2023. 

The development came merely a week after the CIL approved a new wage agreement allowing higher allowances and benefits for non-executive employees. On May 22, CIL said in a regulatory filing that it inked national coal wage agreement with its 2.38 lakh strong non-executive workers for the period of five years, effective from July 1, 2021. As per the agreement, a minimum of 19% guaranteed benefit on emoluments (basic, VDA, SDA & attendance bonus) and a 25% increase in allowances have been granted to non-executive employees. Further, CIL has made provision of ₹9,252.24 crore for a period of 21 Months from July 1, 2021 to March 31, 2023, for this effect.

(DISCLAIMER: The views and opinions expressed by investment experts on are either their own or of their organisations, but not necessarily that of and its editorial team. Readers are advised to consult certified experts before taking investment decisions.) 

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.