Divestment of GoI's stake in CIL-I: Country's largest IPO to hit market by July end

The much-awaited initial-public-offer (IPO) of the country`s largest coal producer, Coal India Limited (CIL) is now slated to hit the capital market by the end of July 2010, more or less as per its original schedule. The launch of the offer had, apparently, faced an impasse owing to opposition from the trade unions, with whom CIL is now reported to have reached an agreement, to initiate the divestment process in the form of what is believed to be the biggest IPO, so far, launched by any state-owned company in India.

The Government of India (GoI) plans to raise around Rs 13,000 crore via the sale of a 10% stake held in the coal company. To this end, CIL aims to file share-sale documents with the stock market regulator by June 2010. The government has, already, formed an inter ministerial panel to carry forward the proposed disinvestment program. The panel would be responsible for the selection of the book runners and lead managers and would also decide on the pricing and timing of the issue, among others. A proposal seeking approval for the proposed divestment is likely to be placed before the cabinet during the first week of May.

In the recently concluded 2009-10 fiscal, the coal major posted a 399.88% surge in its profit after tax (PAT), which reached Rs 8,312.40 crore for the financial year 2009-10, against the profit of Rs 2,078.70 crore recorded a year ago. The net worth of the company has also gone up, from Rs 19,165.04 crore at the end of 2008-09, to Rs 24,541.01 crore. The company achieved 6.8% growth in coal production during the fiscal, by producing 431.267 million tonnes (MT) of coal. Pertinently, CIL contributed a total of Rs 7,020.51 crore, in the form of corporate tax, dividend and dividend tax, to the central exchequer during the just-ended fiscal, as against Rs 5,920.15 crore paid during 2008-09.