The initial public offer (IPO) of Coal India Ltd. (CIL) will now be 10 per cent of the current equity of which one per cent would be reserved for the employees. This marks a change from the earlier planning, which envisaged an offering of one per cent for employees over and above the 10 per cent.
This change was made as it was found the present guidelines of the Securities and Exchange Board of India permit an infrastructure company or an energy company to make such an offering to employees within the stipulated IPO offering. Earlier, on March 6, SEBI had cleared the participation of the four lakh-odd employees of CIL and its subsidiaries in the issue. It was then thought that while 10 per cent would be the IPO portion, another one per cent would be divested in favour of employees.
Chasing a target of hitting the market by the first week of August, all efforts at the headquarters of CIL and its subsidiaries are now geared towards closing the 2009-10 accounts by May 31. CIL Chairman P. S. Bhattacharyya said that once the government approvals for the issue were in place, the book running lead manager (BLRM) would be selected by the Department of Divestment after which the process for filing the draft red herring prospectus would begin. “We plan to complete this by June 15 or so and hit the market after the road shows.''
Expressing confidence that the first-ever public offer by a government-owned coal company in India will evoke a “remarkable response,'' Mr. Bhattacharyya said this confidence was based on the interest in the company shown by overseas and domestic investors during informal discussions.
“While I cannot comment on the valuation of CIL but I can say that the current earnings and the several ‘upsides' to CIL's long-term future, including its huge coal reserves — around 63 billion tonnes — will dictate the valuation,'' he said.
CIL, which has overcome all odds to close the last fiscal with good production growth, estimates a profit after tax of Rs. 8,500 crore. Its current paid-up capital stands at Rs.6,300 crore.
CIL was planning a capital expenditure of Rs.3,800 crore in the current fiscal and had kept ready a war-chest of Rs.6,000 crore for acquisition of assets abroad, Mr. Bhattacharyya said.