Crisil assigns top rating to Coal India's IPO

Rating agency, Crisil, today said that it has assigned a Crisil IPO Grade 5/5 (five-on-five) to the proposed initial public offer (IPO) of state-run Coal India (CIL).

This grade indicates that the fundamentals of the IPO are 'strong', a Crisil statement said.

State-owned CIL, the country's largest coal mining company, is planning to raise Rs 13,000 crore through an IPO to fund the infrastructure projects in the country. This will be the largest IPO in the Indian capital market after Reliance Power's offer in January 2008 through which the company had raised Rs 11,500 crore.

The Union Cabinet has approved a divestment of 10 per cent of government stake in the Navratna PSU. The Centre currently holds all the equity in the company.

The company will offload around 630 million shares through a book-building process which is to be launched in October.

CIL, the largest producer of coal in the world, has the largest resources of 64.8 billion tonnes. In FY10, it produced 431 million tonnes of coal, which accounted for 81 per cent of the coal production in India.

The company owns and operates 471 coal mines--163 are open cast, 273 are underground and the rest are mixed. Coal production is carried out by the seven subsidiaries of the company.