InvestorQ : Is it true that Coal India is planning to hive off its coking coal subsidiary?
prachi Patwardhan made post

Is it true that Coal India is planning to hive off its coking coal subsidiary?

sara Kunju answered.
2 months ago

Public sector Coal India Ltd plans to divest 25% stake in its unlisted arm Bharat Coking Coal Ltd (BCCL). Coal India is India’s largest coal miner and accounts for a tad over 80% of the total coal output in India. Most of its output goes to powering the thermal power generation. The balance 20% of coal output in India is accounted for by Singareni Collieries and by the various captive coal producing mines allocated to other corporates.

To start with, Coal India will look to arrive at a valuation and hive off its coking coal subsidiary Bharat Coking Coal Ltd (BCCL). Coking coal is a key input in the manufacture of steel and coking coal prices have shot up sharply in recent months. Separating the coking coal business will eventually enable better valuations as it is less regulated than coal. Hence it can also get better valuations in the market once it is listed.

Listing BCCL will come at a later stage, once the hive off is properly completed. This is subject to the approval of Coal Ministry and the government. For FY21, Bharat Coking Coal achieved coking coal output of 24.66 million tonnes and offtake of 21.13 million tonnes. However, BCCL had incurred net loss of Rs1,577 crore due to sharply lower sales. BCCL is a subsidiary of Coal India Ltd and operates the coking coal mines in Raniganj and Jharia.