Coal India may join hands with BHP Billiton

The country's largest coal producer, Coal India Limited (CIL), is mulling a swap deal with the world's biggest miner, BHP Billiton, wherein CIL will partner BHP in Australia and the latter would be the partner for CIL in India.

"There is no formal proposal for this. It is a thought right now," said Partha S Bhattacharya, chairman of CIL.

The company is looking at overseas partners as it explores participation in the coal trade beyond the shores of India. This could take the form of equity stakes in coal blocks or in companies that already own and are prospecting in blocks.

"We have kept our options completely open on this," he said, adding the focus countries right now were Australia and Canada. This would ensure that the first venture by the overseas division, CIL Videsh, has "100 per cent success guaranteed," he said.

The government-owned company has cash reserves of Rs 11,000 crore, more than sufficient to fund its buys overseas, and it will soon have the autonomy to independently take large investment decisions, having applied for the Navratna status. "We have just applied for Navratna status. It could take 6-12 months," Bhattacharya said.

The firm may then look at floating an IPO, not for raising finances, but as a means of ensuring tighter corporate governance. However, "between the two, IPO and Navratna status, Navratna is a priority," he said.

CIL, through its subsidiaries, produced 353 million tonnes of coal last year and managed gross sales of almost Rs 34,000 crore. It posted a profit before tax of Rs 8,676 crore. "The profit is likely to be the same, or lower this year, as e-auction has been stopped by the courts for now," Bhattacharya said.

The company plans to invest Rs 15,000 crore over the next five years to increase coal production to 520 million tonnes.

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Royalty check

Royalty rates for coal and lignite, last revised in August 2002 and March 2001, respectively, are likely to be increased.

"The matter would soon be placed before the cabinet committee on economic affairs for a decision," minister of state for coal Dasari Narayan Rao told Parliament today.

He said the central government recognised the importance of royalty as a source of revenue for the state governments. However, the states which levied local taxes would have an "adjusted" royalty rate to prevent disparities across the states, he said.