The Hindu Business Line : Coal India IPO likely this year

Public plans
Coal India has equity base of Rs 6,316 crore
Is holding company of seven coal producers
Aggregate profit to top Rs 7,043 cr this year

New Delhi March 13 Coal India Ltd is expected to hit the market with its much-waited IPO before the end of the first quarter or the beginning of the second quarter of the 2007-08 fiscal.

The exercise is likely to pass political muster since it would not be a disinvestment in the traditional sense but issue of fresh capital.

The move follows the recent call from the Prime Minister, Dr Manmohan Singh, to the public sector enterprises to get listed on bourses, which may lead to unleashing of their entrepreneurial capabilities.

Sources told Business Line that having converted all its subsidiaries into profit-making entities, CIL now plans to hit the capital market with a public offer of five per cent of the paid-up capital through the book-building route.

The intention is to raise Rs 4,000-4,500 crore.

When contacted, Mr Partha Bhattacharya, Chairman, said: "It would be difficult to provide a formal assertive answer, either yes or no, as long as I do not have a clear indication from the Coal Ministry."

However, he said that the company would be sending a letter to the Ministry on the issue very soon.

"As a matter of priority, the first step would be to fill up the posts of independent directors in CIL and all its subsidiaries. Only then can the moves towards listing be initiated."

CIL has an equity base of Rs 6,316 crore. It is the holding company of seven coal producing companies.

They are: Northern Coalfields Ltd, South Eastern Coalfields Ltd, Western Coalfields Ltd, Mahanadi Coalfields Ltd, Eastern Coalfields Ltd, Bharat Coking Coal Ltd and Central Coalfields Ltd.

CIL is also the holding company of Coal Mining and Development Planning Institution, the R&D arm.

According to the plans, CIL is likely to go public and not its subsidiaries.

During April-January this fiscal, CIL and subsidiaries posted an aggregate pre-tax profit of more than Rs 5,800 crore.

At this rate, the aggregate profit of coal companies for the full fiscal is expected to exceed the target of Rs 7,043 crore on a pre-tax basis.

"Out of the profits, the subsidiaries are expected to pay dividends aggregating to Rs 2,500 crore to CIL," Mr Bhattacharya said.

From this, CIL has decided to pay Rs 1,500 crore as dividend to Government.

Mr Bhattacharya said that Rs 800 crore has already been paid as the first interim dividend.

"The rest is expected to be paid this month," he added.