How is Coal India looking to take all its group subsidiaries public?
Answer
Answer
Coal India is planning to take all its 8 subsidiaries public as it prepares for a spike in fossil fuel prices to make the best of robust price levels. It is not yet clear if Coal India will list all its subsidiaries or whether it will do a placement for the same. As per the approved cabinet note, two units of Coal India will go public to begin with viz. Central Mine Planning & Design Institute and Bharat Coking Coal Ltd. Central Mine Planning Institute is the consultancy division of Coal India while BCCL supplies coking coal for the steel companies.
Apart from these two companies, the other 6 subsidiaries that are also likely to go public in the near future include Central Coalfields Ltd, Eastern Coalfields Ltd, Mahanadi Coalfields Ltd, Northern Coalfields Ltd, South Eastern Coalfields Ltd and Western Coalfields Ltd. For Central Mine Planning and for BCCL, Coal India is planning to offload shares in the market. The decision on the modus operandi for the remaining companies will be taken based on the success of the first two companies.
The timing appears to be quite apt. The government plans to take Coal India’s units public at a time when the global fuel shortage catapulted coal prices to record highs. Even globally, there is a shortage of coal and the crisis in Russia has only worsened the situation. On the one hand, power demand has been rising while on the other hand, coal supply has struggled to keep pace. This shortage is likely to keep investors interested in the subsidiaries of Coal India.
For FY23, the government disinvestment target is quite conservative at Rs65,000 crore, with nearly one-third already being achieved by LIC. For now BPCL is still hanging in limbo while the Coal India units are more likely to spill over to the next fiscal year FY24. Prior to taking the units public, the government is exploring the possibility of merging Mineral Exploration Corp. Ltd with Central Mine Planning & Design. Coal India is still reasonably valued at Rs114,000 crore, for the kind of valuable franchise that it owns.