Coal India to offload 5% in IPO

Coal India Limited (CIL) is planning to list 5 per cent of its shares on the stock markets. CIL Chairman Partha Bhattacharya will soon write a letter to Prime Minister Manmohan Singh highlighting the coal behemoth's intentions, while also seeking necessary permission to go ahead with its plans.

Bhattacharya said, "It is true we have mooted such an idea, but finally all depends on the government." CIL will need approval from the Union Cabinet as it is a public sector unit.

The prime minister had recently announced that PSUs would be given a free hand in getting listed in the capital markets to garner resources. CIL's move, if accepted by the government, is considered significant as it would then open the floodgates for other profit-making PSUs to enter the capital markets and getting its brand evaluated in a proper fashion.

CIL's current paid up equity is Rs 6,316 crore and has an authorised capital of Rs 8,000 crore. With a current asset base of Rs 24,411 crore and fixed assets of Rs 11,349 crore, the profit-making CIL turned out sales figures of Rs 33,750 crore and a net profit of Rs 8,676 crore, one of highest achieved by the first five top profit making PSUs in the country.

CIL's current net worth stands at a whopping Rs 12,184 crore and according to figures calculated by different research agencies the coal supreme commands a market capitalisation of around $30 billion and is all set to achieve the ambitious target of $50 billion in the coming days.

Bhattacharya said, "Entering the stock market would enhance our credibility, which has already settled down in the eyes of the public at large, going by our commendable results."

According to highly placed CIL officials, the move to enter the stock market would be beneficial to the company especially since it is planning to make forays into power generation and other related sectors with investments of Rs 9500 crore making a total of Rs 15,000 crore during the 11th Plan Period.

CIL, which recently achieved the Mini Ratna status with four of its subsidiaries "" NCL, MCL, WCL and SECL "" will sign an MoU with the Navratna power colossus National Thermal Power Corporation (NTPC) tomorrow, for making moves into power sector and intensive mining. The power unit is likely to be set up in the Brahmani block of Eastern Coalfields Limited (ECL).

Officials point out the benefits to CIL listing shares in the market: Increasing the corporate governance of the company, greater visibility, image and brand building coupled with an enhanced enterprise value, more interaction with the financial markets, which would help the company in shaping its future course of action and planning and also lend a weighted average to its shares.

CIL's plans to make entry into power sector would then be gauged as energy security pulse would be concretely calculated. It will also impart financial discipline, market discipline and, to top it all, will also have the compliance requirement of the company.

A highly placed CIL official said, "With the company planning massive diversification and rejuvenation programmes, the need of the hour is to have feedbacks from the markets and society at large. It is high time that we should know where we stand in terms of brand value and enterprise value in comparison to other profit-making PSUs and private sector blue chips. CIL has already achieved a position of pride to quote its stock in the market and that is what is exactly being done by trying to list our shares."