Kolkata: In a rush to close its initial public offering (IPO) of shares by September, state-owned miner Coal India Ltd (CIL) has abandoned its plan to offer stakes to people who will be displaced by the expansion of its mines.
“There are a lot of legal issues for which we need clearances from Sebi (Securities and Exchange Board of India),” chairman Partha S. Bhattacharyya said. “Because we are in a hurry, our board is of the view that our plan to allot shares to land losers should be put on hold for this time.”
Outgoing divestment secretary Sunil Mitra, who was appointed revenue secretary on 22 January, had said in a TV interview that the government was looking to sell 10% stake in CIL in the year to March 2011.
Forward planning: Coal India chairman Partha S. Bhattacharyya says it won’t be difficult to work out some arrangement under which shares are allotted after the listing to those who stand to lose their land. Indranil Bhoumik / Mint
A finance ministry official said the draft road map for CIL’s IPO would be finalized at a meeting of key officials of the firm and the government in New Delhi on Friday. The official spoke on condition of anonymity as he is not authorized to speak with the media.
The miner, which faces strong opposition to land acquisition, had planned to offer shares over and above money as compensation.
This was intended to make people forced to sell land long-term stakeholders in the company’s growth and, in turn, make land acquisition easier.
A similar compensation of money and shares had been offered in 2007-08 by JSW Bengal Steel Ltd, a subsidiary of JSW Steel Ltd, which is building a steel plant in West Bengal’s Maoist-affected West Midnapore district. The acquisition went off peacefully.
Now, however, CIL has decided against it. It wants the IPO to be concluded by September because, under Indian securities market regulations, an issuer must state in its offer prospectus audited financial results that are not more than six months old. CIL wants to use its audited results for the year until March for the IPO.
But Bhattacharyya added, “Once our shares are listed, it wouldn’t be difficult to work out some arrangement under which shares could be allotted later to people from whom we buy land.”
CIL would still seek Sebi’s approval for allotting shares to the employees of its seven subsidiaries. A firm is allowed to put aside some shares for its employees, but needs clearance for allotting them to the employees of its subsidiaries.
“Most of our employees are on the payrolls of our subsidiaries,” Bhattacharyya said.
To ensure that the IPO is not delayed, CIL would try to complete the audit of its annual results by June, the chairman said. This means two simultaneous audits would be carried out—one by the Comptroller and Auditor General of India, auditor of state-owned firms, and another by a private auditor. Though the two audits are ideally done simultaneously, managing them together would be difficult for CIL’s officials.
CIL will also hire nearly 600 experts from various government-controlled organizations to conduct an audit of the stock at each of its 473 mines as it is very time-consuming.