IPO may happen in next fiscal, says Coal India

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS CBI probing Coal India officials for pilferage Divestment Secy: To sell shares in Coal India in FY11 Govt to mop up over Rs 24000 cr in FY10: Divestment Secy

In an interview with CNBC-TV18, Partha S Bhattacharyya, Chairman, Coal India, speaks about the latest happenings in his company and sector.

Here is a verbatim transcript of the exclusive interview with Partha S Bhattacharyya on CNBC-TV18. Also watch the accompanying video.

Q: Could you update us on the IPO (initial public offering), when is it likely to hit the market and what should investors look forward to in terms of the size of the issue?

A: Coal India is an unlisted company and 10% is the likely disinvestment is what the government is looking at and that will enable Coal India to get listed in the stock markets. It should happen in the next fiscal, maybe with a bit of luck it will happen in this calendar year.

Coal India's total paid up capital is Rs 6316 crore, so 10% of that is Rs 631 crore. At Rs 10 nominal value, it is 63 crore shares that we are looking at getting divested and what amount of money will be raised depends on what the valuation is.

Q: There is a clear demand-supply mismatch in terms of coal because outputs been on the higher side, but you are still looking at importing coal, could you shed light on this demand-supply situation?

A: In the short-term, we are looking at demand of coal growing at 10% per annum (p.a) because the capacity addition program in the power sector has accelerated and is likely to be in accelerated form for the next couple of years.

But the domestic production, we feel can grow at not more than 7.5% p.a. Coal India's growth will be around 6-6.5%, the captive players will grow at faster pace because they are not only producing more coal per player, but more players are getting added. So there will be a faster augmentation of that segment, so in all 7.5%. Therefore, 2.5% will be the likely gap which will show up in import of increasing the larger quantities.

If you see the import of coal in 2007-08, 2008-09, there has been a 20% increase there, 49-59 million tonne, so it likely to grow. The way we look at this market is, through a process of strategic alliance it should possible to bring a lot of overseas coal into this country on terms which are definitely better than traded prices. So we are trying to look at that and if that materializes, the country should see more coal coming from overseas.