Kolkata: State-owned Coal India Ltd (CIL), India’s biggest coal miner, plans to acquire overseas assets that are up for either outright purchase or seeking equity participation, taking advantage of the navratna status that empowered it with more financial and administrative autonomy.
CIL is particularly interested in forging partnerships with overseas companies from which it had sought participation in the domestic coal sector.
Expansion plans: Coal India Ltd chairman Partha Bhattacharyya. Indranil Bhoumik / Mint
The company wants to enter a possible arrangement of reciprocal equity participation, whereby it would offer a 50% stake to the international partner in Indian joint ventures, and secure a stake in specific projects with the same company abroad.
“We are already in talks with several world-class companies, especially those active in Australia and South Africa, who have expressed their keenness to participate in such an arrangement,” said CIL chairman Partha Bhattacharyya.
CIL last week became the 18th public sector firm to be made a navratna, giving it more autonomy to make investments. The status, a recognition that it is one of the most prized public sector companies, comes with a stipulation that it seek a public listing within three years.
In August, CIL had planned to restart mining in 18 abandoned mines belonging to three of its subsidiaries — Eastern Coalfields Ltd, Bharat Coking Coal Ltd and Central Coalfields Ltd — and sought the participation of companies abroad.
It is also looking to take advantage of the downturn in the US and purchase assets at a time when prices have fallen steeply. Bhattacharyya recently toured the US, where CIL is scouting for mines that can be purchased.
“Asset prices in the US have fallen and we thought that it might be a good time to buy some,” he said. “We have had encouraging talks with merchant bankers and mining companies in New York and Las Vegas regarding this.”
CIL is primarily looking at acquiring assets yielding metallurgical or coking coal in the US.
Mint could not ascertain how CIL would fund its overseas plans. The Hindu Business Line reported on Monday that the company has cash reserves in excess of Rs20,000 crore.
Bhattacharyya also said the company would now be more aggressive in forming joint ventures with the private sector for exploration and mining of coal.
Since it has now become mandatory for CIL to make an initial public offering within the next three years, it plans to use the opportunity to offer shares to those who had to part with their land as a consequence of the company expanding its operations.
The company has a target of acquiring 175,000 acres in the 11th Plan. “We expect to revise our rehabilitation and resettlement policy soon, and we would definitely want to offer shares to land losers,” Bhattacharyya said.
CIL is expecting a profit before tax of at least Rs10,000 crore in the current fiscal year. Meeting the target is subject to executive pay revision and a coal wage agreement — entailing a 15% hike over and above the existing basic salary of labourers — not having a significant impact on the company’s balance sheet, Bhattacharyya said.