Coal India expecting good response from smaller towns to IPO

Coal India Limited (CIL), which is planning to mop up around Rs 15,000 crore from the primary market, is expecting a good response from retail investoRsin smaller towns to its forthcoming initial public offer (IPO).

“The retail segment has shown good appetite for public issues in recent times, especially for public sector companies. We are confident that retail investoRsin smaller towns will participate in good numbeRsto the IPO,” Central Coalfields Limited (CCL) CMD Ranjan Kumar Saha said at a conference call here.

A miniratna company, CCL is one of the eight subsidiaries of world’s largest coal producer CIL.

He said CIL had been holding road shows at various locations in the country to create awareness about the IPO and encourage retail investoRsto participate. Retail investoRsand CIL employees will get a discount of 5 per cent on the issue price.

CIL’s IPO opens for subscription on October 18 and closes on October 21 for retail and non-institutional bidders. For qualified institutional buyeRs(QIB), the subscription closes on October 20. The IPO, which is the biggest ever in India, has a price band of Rs 225-245 per share of Rs 10 face value. It will dilute the central government equity in the Navratna company by 10 per cent.

The company has reserved 10 per cent of the issue for its employees, 45 per cent for QIBs, 13.5 per cent for non-institutional investoRsand 31.5 per cent for retail investors. During 2009-10, CIL had posted a net profit of Rs 9,833 crore on total income of Rs 52,592 crore.

The company produces 430 million tonnes of coal every year and meets 82 per cent of the indigenous coal demand. It operates 471 mines in 21 coalfields across eight states.

Meanwhile, CIL had floated tendeRsto import eight million tonnes of coal to meet the increased demand in the country, Central Mine Planning & Design Institute (CPMDI) CMD A K Singh said. Commenting on UP, Singh said the annual coal consumption in the state stood at about 100 million tonnes and it would only rise in future keeping in mind the various proposed new power projects.