Coal India IPO Expected In July or August

Indian government to divest 10 per cent stake

The Indian government is to list a stake of around 10 per cent in Coal India Ltd (CIL), the country’s second-biggest coal miner in a move that will raise around $2.7 billion.

Speaking on the sidelines of an industry conference, the country’s coal minister, Sriprakash Jaiswal said that the government would shortly be announcing merchant bankers to advise on the flotation. No date has been given, but it is estimated that CIL will come to market around July or August.

Mr Jaiswal said that coal output in the current financial year will rise to 603 million tonnes, against 535 million tonnes in 2009/10.

However Mr Jaiswal warned that there would be a coal shortfall of around 81 million tonnes, against 70 million tonnes in the last fiscal year and the country’s industry should look overseas to secure supplies.

"In the next year (2011/12) no matter to what extent we meet the shortfall, the requirement will grow more than that.

"The speed with which power plants are coming up, the requirement for cement is rising, requirement for sponge iron is rising, all these companies should look for properties overseas," he said.

"They should not depend on coal properties only in India."

Analysts believe that once the company begins to move into the private sector, it should be easier to reform production and increase productivity.

The Coal India IPO is likely to be the second-biggest public offering in the country’s history, behind Reliance Power’s $3 billion listing in 2008. Proceeds will go to reducing the Indian government’s widest deficit in over 20 years.