KOLKATA: The Centre is considering a proposal to list six profit-making wholly-owned subsidiaries of Coal India Ltd.
The move is part of a proposal to disinvest in 11 mini-Ratna central public sector undertakings — out of a total of 70 — in the first phase.
The mining companies are South Eastern Coalfields (SECL), Central Coalfields (CCL), Northern Coalfields (NCL), Mahanadi Coalfields (MCL) and Western Coalfields (WCL).
The R&D arm of the coal major, Central Mine Planning and Design Institute Ltd (CMPDI), has also been identified for disinvestment.
Miners that are financially weak — Bharat Coking Coal and Eastern Coalfields — are not part of the proposal. Both companies have accumulated losses and are under the purview of the Board for Industrial and Financial Reconstruction.
According to sources, the Department of Disinvestment has advised the Coal Ministry to consider disinvestment in the six companies.
While the Ministry has yet to deliberate on the issue, it is not clear how the Centre will gain if CIL disinvests part of its stake in the subsidiaries. On the contrary, the move will bring home more cash to an already cash-rich coal monopoly.
Available estimates suggest that CIL has cash reserves of nearly Rs 55,000 crore (approximately $12 billion). In the absence of avenues to deploy the cash, the bulk of the money is in bank fixed deposits, earning high interest.
Moreover, CIL as a holding company is dependent on the subsidiaries for production. It is not clear if listing of the mining subsidiaries would impact investors’ interest in CIL.
Performance of miners
In 2010-11, the six subsidiaries together posted a profit before tax of over Rs 14,700 crore. MCL (Rs 4,039 crore), NCL (Rs 3,956 crore) and SECL (Rs 3,777 crore) were the major profit churners. CCL and WCL posted a PBT of Rs 1,860 crore and Rs 1,068 crore respectively. CMPDI, being a consultancy wing, has a smaller balance sheet and posted approximately Rs 24-crore profit.
Of the five miners, SECL was the only company to have met production targets for the last fiscal.