The much-awaited initial public offer (IPO) of Coal India Ltd (CIL) will get delayed and miss its earlier timeline of hitting the capital market between the last week of July and the first week of August. However issues such as appointment of book running lead managers (BRLMs) and legal advisers have been sealed, following an enabling approval given in this regard by the Central Government to public sector undertakings (PSUs) awaiting formal nod for their issues.
In the case of CIL, the date was fixed in conformity with international stipulations (in the U.S.) of issuing shares in the stock market on the basis of a balance-sheet which should not be more than 135 days old. CIL is accordingly busy readying the first quarter results which will now have to be appended with the 2009-10 results, as it is not possible to use the 2009-10 results only, in the event of the IPO getting delayed beyond its original timeline.
The navratna PSU is awaiting government nod for its issue through which the company may raise over Rs. 12,000 crore, Coal Ministry sources have said. CIL is scheduled to offer 10 per cent of its Rs. 6,300-crore equity now held wholly by the Union Government. Part of this has been earmarked for the 3.99 lakh employees of CIL and its subsidiaries.
However, through a recent government decision, it is now possible for all PSUs planning issues to go ahead with matters such as appointment of BRLMs and legal advisers. “The PSUs have been told that even outside a formal Cabinet nod for their issues, they can go ahead with this part of the preparatory work for an issue even going through the process of due diligence without filing the documents with the Securities and Exchange Board of India (SEBI),” a source in the Union Disinvestment Ministry said. Accordingly, six investment bankers shortlisted earlier have been appointed. Two legal advisers, one each from the government and the investment bankers have also been appointed, sources said. Indications were that this delay might be a blessing in disguise for CIL as July-August are vacation months in many Western countries and may have affected foreign institutional investor (FII) participation.
For the issue now, as against the 2009-10 net revenue of Rs. 44,615 crore and a post-tax profit of Rs. 9,622 crore, CIL will have as its basis the April-June balance-sheet. With production getting hemmed in by huge stocks which had accumulated last fiscal in the wake of problems over transportation, efforts are now geared towards depletion of coal inventories and increasing offtake. Accordingly, production may be lower during this quarter although overburden removal is higher during the April-May period as compared to April-May 2009. “The operations have been kept in a ready state,” a company source said.
