Coal India Ltd (CIL), which was facing procedural hurdles for its overseas acquisition plans, is finally getting a relief.
The finance ministry has assured the firm that the rule of a minimum 12 per cent internal rate of return (IRR) for acquisitions and also bar on unlisted companies will no longer be there as it can goahead with such plans, but with the ministry approval.
“Finance ministry is clear about one thing that we can goahead with acquisition of even unlisted firms. As far as IRR is concerned, they say that now we can goahead with proposal even if the IRR is below 12 per cent. But we need a clearance from the finance ministry itself for such proposals and it needs a proper due diligence, that we normally do. We can also go for unlisted firms now,” said N C Jha, chairman and managing director, CIL.
The firm’s acquisition plans abroad were stuck as the government had directed it to invest only in listed companies and asked to make sure that the IRR will be above 12 per cent. It was knocking on the doors of the ministry for a long time to relax these norms.
The Kolkata-based company was looking on acquiring 15 per cent stake on the United States-based Peabody Energy's Australian asset and was also in talks with mines in the US and Indonesia. Jha, who was speaking on the sidelines of the firm’s 37th Foundation Day, added that the proposals that the firm is getting now is in the range of 8 to 9 per cent.
Meanwhile, regarding the ongoing crisis on the shortage of coal for power sector, Sriprakash Jaiswal, coal minister, has assured that the plants will no more suffer due to lack of supply.
“Currently, not even a single power station in the country has shortage of coal and we will not let it happen. The main reason for what happened last month was because of a month-long strike in Andhra Pradesh and also due to rains in Jharkhand, Chhatisgarh and West Bengal. It will not happen anymore and we are confident to achieve the production target too,” Jaiswal said.
Last month, Coal India had diverted its e-auction coal for the power sector due to this. The minister also said that there will be no coal price hike this year. "There will be no price hike soon. Atleast this year," he said.
