MUMBAI: Shareholders, both small and big, of state-owned coal producer Coal India Ltd (CIL) have rallied behind The Children’s Investment Fund (TCI), the British hedge fund, in its recent actions against Coal India. Individuals, as well as institutions, have written to the fund, encouraging it to continue the campaign to protect the interests of minority shareholders, TCI told Business Standard on Monday.
Shailendra Mehta, who owns 700-odd Coal India shares, wrote to TCI saying, “Thank you for the initiative you have taken. I own 700+ shares of CIL. I was feeling helpless against the dictatorship of the government of India with regard to this matter.”
According to Mehta, government should not own more than 75 per cent shares of the company in accordance with guidelines laid down by the Securities and Exchange Board of India (Sebi), which are applicable to other companies. “Hopefully, the Indian law acts faster and makes the decision the government is not able to make,” www.coal4india.com, the website run by TCI, quoted Mehta as saying.
Nandita Agarwal Parker of Karma Capital Management LLC, a foreign institutional investor (FII), said, “We empathise strongly with your situation and extend our support to your efforts. We believe your actions are setting a great precedent for institutional shareholders in India, who, in the past, have simply walked away when in disagreement rather than fight for their investors.”
TCI said several other institutions,which own CIL shares, have also expressed solidarity with it. “A number of large investors have spoken to us and expressed support. But, at the moment, we are not looking at any collective effort as it can delay the process,” Oscar Veldhuijzen, partner, TCI said.
He added TCI was quite experienced in the field and could act quickly “while others are far more bureaucratic”.
Investors said the government had to realise that the character of a public sector unit changes completely after listing. Shirish Beke, an individual small shareholder, said, “If the government wanted Coal India to be used according to its dictates, why was it considered for divestment in the first instance? Once you divest, you need to be fair to all.”
According to Beke, the government has to recognise it is not the only shareholder. “It is a budding case of preventing the oppression of minority shareholders. I support your proposed action of prosecuting the Coal India board,” coal4india.com said.
Some others took exception to the way the government has reacted to TCI’s moves over the past few weeks. Referring to an official comment, which said TCI could sell its stake if it was unhappy, one of them said, “I was shocked when the coal secretary said if TCI was unhappy, it could sell its stake….it is very negative for PSU companies….I think all the divestment in future would be bailed out by LIC only.”
Veldhuijzen of TCI said the response had been encouraging and the fund was keen to engage in a constructive discussion with the government. “But their response has been dismissive,” he said. “The government has been saying it has been acting in public interest. But, we are of the view that selling coal below fair prices is not in public interest. This is similar to the allocation of 2G spectrum,” he added.