* To invite bids from bankers, advisers this week
* Govt targets share auction by August or September
* Aims to raise $7.4 bln in all stake sales in 2013/14
(Adds details, context from paragraph 4)
By Prashant Mehra
MUMBAI, May 9 (Reuters) - The Indian government has firmed
plans to sell a 10 percent stake in Coal India Ltd
through a share auction and will invite bids this week from
bankers and advisers to manage it, two sources involved with the
India's Department of Disinvestment (DoD) aims to launch the
share sale by August or September, said the sources, who
declined to be identified.
At the current share price, the stake would be worth $3.6
billion, although the shares are likely to be offered at some
discount to the market price. The Indian government owns 90
percent of Coal India, the world's largest coal miner by output.
The sale is crucial to New Delhi's efforts to raise 400
billion rupees ($7.4 billion) this fiscal year through sales of
stakes in state companies to cut its fiscal deficit.
By comparison, it raised $4.4 billion in 2012/13 from stake
The government's divestment plans include stakes in top
state refiner Indian Oil Corp, power equipment maker
Bharat Heavy Electricals Ltd and a follow-on public
offer in Engineers India Ltd.
Bankers to manage the Engineers India sale are to be
short-listed later this month.
Government officials had considered divesting part of the
Coal India stake through a share buyback by the company. It
decided against the proposal, however, because stock market
guidelines bar companies from fresh equity issues within six
months of completing a share buyback, the sources said.
The government expects to appoint merchant bankers and
advisers for the Coal India offer by early June and start
overseas investor roadshows later that month, one of the sources
Coal India debuted on the stock markets in 2010 after a
record $3.4 billion initial public offering.
The stock, despite being seen as a proxy for rising energy
demand in Asia's third-largest economy, has underperformed the
main stock index due to worries over the company's
inability to make big production gains after delays in approvals
for some of its projects.
On Thursday, Coal India shares closed down 1.1 percent in a
weak Mumbai market.
($1 = 54.13 rupees)
(Editing by Jane Baird)