Striking At Black Diamond - Coal India

Turning around a loss-making PSU into a profitable one calls for a Herculean effort. CIL took up this uphill task in 2006 and gradually steered itself into the path of golden promise and prosperity. The proper implementation of a comprehensive Capital Restructuring Program and Revival Plan gradually wiped out the loss, turning the company into the largest dividend and tax-paying PSU in the recent years.

Today, Coal India is not only the largest coal producing company in the world, recording a production of 431.26 million tonnes in the fiscal 2010, but also declared as the world’s biggest coal resource-holder of 64,786 million tonnes (as per CRISIL Research).

CIL a 100 per cent state-owned firm has its coal production operations which are primarily carried out through seven wholly-owned subsidiaries spread over eight states in India. It has 471 mines in eight states, which account for 82 per cent of the country’s coal production.

In addition, another wholly-owned subsidiary of CIL, CMPDIL carries out exploration activities for its subsidiary and provides them technical and consultancy services. CIL has also established a wholly-owned subsidiary in Mozambique, Coal India Africana Limitada (CIAL) to peruse coal mining opportunities in Mozambique and has got prospecting licenses for two coal blocks.

The company has posted a total sales income from Rs 340,087.99 million in the fiscal 2006 to a whopping increase of Rs 525,922.92 million in fiscal 2010, while the profit after tax increased from Rs 61,136.01 million in fiscal 2006 to Rs 98,294.09 million in 2010. As on March 31, 2010, the company has declared its reserves and surplus of Rs 195,289.14 million and a net worth of Rs 258,437.43 million. A cash and bank balance of Rs 390,777.60 million with a total indebtedness of Rs 20,868.51 million are also reported on March 31, 2010.

In recognition to the company’s contribution to the economic growth of the country, Govt of India had conferred Navratna status to the company on October ’08. The Navratna status endows the company with the responsibility to go for listing within three years, i.e., by October 2010. Consequently, CIL Board has met and cleared the 375 pages Draft Red Herring Prospectus (DRHP), which is filed with the SEBI as per its existing guidelines.

CIL has an equity base of Rs 63163.6 million. The government has decided to divest 10 per cent equity in the CIL next fiscal, i.e. 2010-11, in the capital market through the book-building route. The IPO is entirely a stake sale by the government without any fresh equity issue because CIL doesn’t need to raise fresh capital. The sale proceeds of the IPO will accumulate in the government’s coffer.

CIL is also emerging as a major player in the international arena with acquisition of mines in Mozambique and Indonesia. The company is also eyeing mines in Canada and Australia. Coal Venture International, a joint venture along with SAIL, NMDC, NTPC and RINL, has been formed with an aim to acquire overseas stakes in the near future.