Sunday, October 17, 2010

CIL eyes Rs 15k cr mop-up from IPO

NEW DELHI: The maiden public offering from state-run monopoly Coal India, billed as the biggest so far in the history of corporate India, will open on Monday even as the coal major renewed its efforts to get the government to prune the list of 'no-go' areas where mining is restricted.

The issue is expected to mop up Rs 15,000 crore to beat the Rs 11,700-crore offering from Anil Ambani's Reliance Power in January 2008. The issue has been priced in the range of Rs 225-245 a share and is expected to be the star attraction for retail investors till it closes on October 21. A 5% discount will be on offer for retail investors to attract wider participation.

"The IPO is the result of all the sweat and toil consistently put in over the years by past and present employees , officers and management to build the company from scratch. Offering a share in one of the world's biggest coal mining firms (by reserves) is the best gift the government can give before Diwali to the aam aadmi," Coal India chairman Partho Bhattacharya said.

While Bhattacharya declined to comment on efforts to free the company's operations from the shackles of the environment ministry's 'go' and 'no-go' classification of coal acreages, government sources said the coal ministry had prepared a proposal to seek the Cabinet's nod.

The ministry is aiming to seek a deal wherein Coal India will get permission to start mining in open forest areas within 300 days, while the government goes through the time-consuming process of arriving at a final view on the no-go categorisation . "If this is done, Coal India will be able to ramp up production without delay. Open forest areas have thin foliage and generally are shrublands. Coal India has excellent record of afforestation and such land can be turned green by the company after mining," a source said.

At present, the country is short of approximately 60 million tonnes of coal as rise in demand outpaces growth in domestic production. While production by CIL — which accounts for nearly 80-90 % of supplies — is rising at 7%, demand is increasing by about 10%. The company had to lower its production target since 17 of its projects ran into delays over green issues.

The float has seen a broad endorsement from almost all big as well as small investment banking firms. The Centre, which will divest its 10% stake through the offering , is also bullish on the issue that will help the government fulfil Rs 40,000 crore divestment target this fiscal.

Read more: CIL eyes Rs 15k cr mop-up from IPO - The Times of India http://timesofindia.indiatimes.com/business/india-business/CIL-eyes-Rs-15k-cr-mop-up-from-IPO/articleshow/6766599.cms#ixzz12g6fsGCf