Govt may divest 10-11% in Coal India via IPO

Govt may divest 10-11% in Coal India via IPO

New Delhi: The government is likely to divest 10-11% stake in Coal India Ltd (CIL), the country’s largest coal producer, through an initial public offering that could hit the market in July or August, the coal minister said on Wednesday.

“This has gone to an advanced stage. Merchant bankers will be appointed soon," Sriprakash Jaiswal said, speaking to reporters on the sidelines of an industry event.

He did not disclose how much the issue is expected to raise, but Coal India’s chairman Partha Bhattacharyya said this week a 10% stake sale could fetch the government Rs12,000 crore ($2.7 billion).

The minister said coal output in the current financial year is seen rising to 603 million tonnes, as against 535 million tonnes in the fiscal 2009-10.

However, shortfall of coal is also likely to rise to 81 million tonnes in the current financial year, Jaiswal said, compared to 70 million tonnes in the last fiscal.

“In the next year (2011-12) no matter to what extent we meet the shortfall, the requirement will grow more than that," he said.

“The speed with which power plants are coming up, the requirement for cement is rising, requirement for sponge iron is rising, all these companies should look for properties overseas," he said.

“They should not depend on coal properties only in India."