Navratna status binds CIL to get listed in 3 years

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Sending a clear signal that the Government wants fundamentally strong public sector undertakings to be publicly traded companies, Coal India Ltd (CIL) was conferred Navratna status on Thursday, with a condition that the company will have to get itself listed within three years.

This condition has been laid down by the apex committee headed by the Cabinet Secretary, which grants final approval for Navratna status of a company.

Sources pointed out that this is not disinvestment because the Government will not sell any stake, but the company would issue fresh shares through an initial public offering.

Time-bound condition

CIL is the eighteenth central public sector undertaking to receive Navratna status. This is the first instance where a company has been granted Navratna status with a time-bound condition to get listed, sources said.

Coal India Chairman, Mr Partha Bhattacharya, told Business Line: "The company has to get listed within a stipulated period of three years, beyond which it becomes answerable."

"If the listing is not done in three years the company has to go back to the apex committee with explanation," he said.

However, the new found status will work well for the coal company to mop up funds from the market even in bad times.

Deploying reserves

Interestingly, however, CIL is already sitting on more than Rs 20,000 crore of cash reserves that is yet to be deployed in expansion of existing mines and opening up of new mines, but the progress is very slow.

According to the Chairman, "The IPO proposal had been there since years. But we wanted to do the IPO after the Navratna status because we can internalise the higher valuation."

"This new status will also help speed up revival of the loss-making Eastern Coalfields Ltd (ECL) and Bharat Coking Coal Ltd (BCCL), which are sick companies. If there are some good projects of ECL or BCCL, we can sanction up to Rs 1,000 crore, which was not possible earlier even if Coal India used its own funds. Their turnaround time will come down," he said, reports The Hindu Business Line.