Newspapers are carrying articles on how Trade Unions of Coal India employees have actually advised them wrongly on the Coal India IPO.

Let us recap the facts:

[a] Coal India came out with an IPO of 632 million shares out of which 63.2 or 10% were reserved for employees.

[d] The employees were eligible for a 5% discount on offer price of 245. The Coal India share price on the day of listing was Rs. 343.35. The employees therefore have lost Rs. 632 Crores.

While these are the plain facts, the actual transactions that happen represent a completely different reality. Thousands of workers in industry in particular an industry like coal mining are uneducated and illiterate. Many of them do not have bank accounts forget about demat accounts. [Coal India offered to help them open demat accounts.] They are apprehensive of dealing in shares. Even if they are not, they have little understanding of what investment in shares entails. So the stage is set for people who ask them to apply for shares and on allotment get it transferred to their name. In such transactions many employees do not have to pay any amount, in fact, they just receive payment for selling the shares. The prospective buyer puts money with application. Interestingly advising them of such deals are usually ‘educated’ employees within the industry itself.

So the employees lose because the Trade Union leaders misguide the employees or because the employees sell out their quota rather too early without understanding that if they had waited they could have had higher gains.

Trade unions would have done well to educate their members on investments instead of taking dogmatic and antagonistic stance which has only resulted in loss to employees; it has not prevented the privatisation. Unions must prevent exploitation of workers, but no purpose is served by preventing them from gaining what is rightfully theirs!

Vivek