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Coal India seeks approval for IPO proposal — Plan to mop up Rs 3,000 cr

Our Bureau

Face value of share to be Rs 10 and the issue would be made at a premium of Rs 100 per share.

Kolkata , Feb. 9.

COAL India Ltd (CIL) has urged the Union Ministry of Coal to permit it to make an initial public offer (IPO) of five per cent of the company's total paid-up capital of about Rs 6,000 crore.

Taking into account the huge turnover and profit of the company, the CIL management feels that it would be prudent to make an IPO particularly when all its production subsidiaries are operating with profits. Meanwhile, Crisil offers "AAA" credit rating for investments in the company. This apart, the future coal market appears bright.

Disclosing this to presspersons here on the sideline of a coal conference, organised by Metaljunction Services Ltd, the Chairman of CIL, Mr Shashi Kumar, said a proposal in this regard had been submitted to the Ministry. He said that the face value of a share would be Rs 10 and the issue would be made at a premium of Rs 100 per share. It aims to mop up about Rs 3,000 crore from the proposed IPO.

Mr Kumar said that CIL expects to earn a PBT (provisional) of about Rs 8,000 crore on a turnover of about Rs 32,000 crore and a production of about 345 million tonnes during the current fiscal as against actual turnover and profit and a production of about Rs 30,000 crore and Rs 4,801 crore and about 331 million tonnes, respectively in the last fiscal. The company earned a profit (provisional) of about Rs 6,013 crore till January of the current fiscal.

He said the purpose of IPO was to make the company more transparent in its governance and also to improve the corporate image. He lamented that the CIL-management had failed to highlight the fact that it was the largest employer among all coal companies in the world, employing over 4,50,000 staff & workers about 15,000 executives.

Call for e-auction

Earlier, addressing the opening session of the conference on Indian Coal-2006, the former Secretary in the Union Ministry of Coal, Mr P.C. Parakh, said about 25 per cent of total CIL's production should be sold through e-auction, thereby ensuring the development of a vibrant " legal" spot market for coal.

Viewing that there is no transparency in the coal pricing mechanism, he suggested that pricing of coal should be made in a more scientific manner.

Mr Parakh said that all production subsidiaries of CIL should be given absolute freedom to determine prices of coal they produce.

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