Coal India RHP to be filed next week

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India's largest coal producing company, government-owned Coal India (CIL) will file its red herring prospectus (RHP) for its IPO next week, reports CNBC-TV18 quoting a Coal India official. The issue will open for subscription on October 18, 2010.

CNBC-TV18 learns that the IPO price band will be decided in the second week of October while decision on anchor investor will be taken before price band. "The EGoM may decide on anchor investor by September 30," CIL said.

The official also informed the company would import 2 million tonne (MT) coal for Damodar Valley and import 4 MT coal for NTPC in 45 days. "There are no plans to hike coal prices as of now."

The company is offering 63.16 crore equity shares through the issue, which was an offer for sale by the President of India, acting through the ministry of coal, Government of India.

The offer shall constitute 10% of the post offer paid-up equity share capital of company. The issue will close on October 21.

As per draft prospectus, CIL is the largest coal producing company in the world (Source: CRISIL Research), based on raw coal production of 431.26 million tons in fiscal 2010. It is also the largest coal reserve holder in the world (Source: CRISIL Research) based on reserve base as of April 1, 2010.

As of March 31, 2010, it operated 471 mines in 21 major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed mines (which include both open cast and underground mines). It produces non-coking coal and coking coal of various grades for diverse applications.

The company will not receive any proceeds from the offer and all proceeds will go to the selling shareholder (GoI), which stake will be 89.99% post issue.

ICRA has assigned a grade 5 to the proposed issue, indicating strong fundamentals and CRISIL assigned a grade 5/5, indicates the fundamentals of the IPO are strong relative to the other listed equity securities in India.

For the year ended March 31, 2010, CIL has reported net profit of Rs 9,622.45 crore on total income of Rs 52,592.29 crore.

Book running lead mangers to the issue are Citigroup Global Markets India Private Limited, Deutsche Equities (India) Private Limited, DSP Merrill Lynch Limited, ENAM Securities Private Limited, Kotak Mahindra Capital Company Limited and Morgan Stanley India Company Private Limited.