For Finance Minister Arun Jaitley it would be a huge relief to see Rs 22,557 crore flow into the coffers from the sale of almost 10 per cent equity in the state-run mining monopoly Coal India. That's more than 52 per cent of the budget target of raising Rs 43,425 crore through disinvestment in 2014/15. Until then, the government had raised barely Rs 1,719 crore this fiscal through a stake sale in SAIL. The remaining Rs 19,149 crore is targeted to be raised by selling stakes in some other central public sector undertakings, such as ONGC, NHPC, Indian Oil, Nalco, BHEL, NMDC, Rural Electrification Corporation, Power Finance Corporation, besides a few others. And that's where the intricate experience of Coal India share sale matters.

Clearly, if the Coal India equity sale is anything to go by, state-run banks and financial institutions must prepare to put up to Rs 19,000 crore into government coffers. If the response to the new issues remains as lukewarm as it was to Coal India's, whether they like it or not, they will have to cough up the amount. The last time Coal India sold equity in November 2010, its shares were over-subscribed more than 15 times. The 10 per cent equity sale raised Rs 15,200 crore in the biggest new share sale at that time.

But this time as the biggest ever share offering in Indian history went under the hammer, it was a different story. Consider this: the auction received bids for just 67.52 crore shares against the 63.16 crore shares that were on offer - just 1.07 times the offer, or Rs 24,210 crore. Interestingly, retail investors, who were being given a five per cent discount to the offer floor price and for whom the quota had been doubled from the Sebi-stipulated 10 per cent of the shares on offer to 20 per cent, were largely cold to the share offer and subscribed barely 44 per cent of their quota. They bid for 5.6 crore shares against 12.63 crore shares on offer. This is despite broking houses exhorting potential retail investors to invest in the Coal India stock to not just avail the discount but also expect dividend at the end of 2014/15 as the government prods all profitable PSUs to declare generous dividends to bridge the fiscal deficit. In the previous fiscal, Coal India had paid Rs 18,317 crore as special dividend to the Centre, its main shareholder.

Eventually, government-owned financial institutions, led by LIC, had to pitch in to salvage the issue. LIC itself bought shares worth Rs 10,000 crore - or, nearly 40 per cent of the issue. Other government-owned firms such as SBI, affiliated banks, financial institutions and mutual funds are believed to have rushed to salvage the issue when just 51 per cent of the issue was subscribed and there was barely an hour to go before issue close. Among foreign funds, Segantii Capital and Capital Group are likely to have participated in the auction.

Following the auction, the government's stake will drop to 79.65 per cent from 89.65 per cent. Next fiscal, expect another five per cent dilution in government holding in Coal India because Sebi's minimum public shareholding norms require every listed company's promoter holding to be capped at 75 per cent. But, for now, the government has to worry about raising the remaining Rs 19,000-odd crore in the next two months. And government-owned banks, FIs and mutual funds have to worry about contributing to all the shortfall. They will be asked to, anyways.