Coal India looking at listing all its subsidiaries on bourses
CMPDIL, BCCL first off the block among state-run firm’s eight wings
Subhash Narayan and Rituraj Baruah
NEW DELHI: Coal India Ltd (CIL) is looking at taking all its eight subsidiaries public as prices of the fossil fuel soared after power demand rebounded from the pandemic, a government official aware of the development said. The coal ministry has approved a draft Cabinet note to sell 25% of state-run CIL’S consulting unit, Central Mine Planning & Design Institute, and Bharat Coking Coal Ltd to the public. The other subsidiaries that may go public are Central Coalfields Ltd, Eastern Coalfields Ltd, Mahanadi Coalfields Ltd, Northern Coalfields Ltd, South Eastern Coalfields Ltd, and Western Coalfields Ltd.
“There is a plan that Coal India units offload its shares in the market. It started with two companies. The process is underway. The board has passed (the resolutions for the stake sales),” the official said, requesting anonymity.
The government wants to take CIL’S units public at a time a global fuel shortage has catapulted coal prices to a record. Coal use has been surging worldwide in recent months after years of decline because of rising power demand as economic activities gather pace after the easing of the pandemic and supply disruptions caused by Western sanctions on Russia, a major miner, for invading Ukraine.
said coal companies may garner investor interest in the near term because of red-hot prices. However, the fuel’s longterm future appears bleak as environmental compulsions and strict climate targets may force investors to shun them.
“Coal and other fossil fuels seem to be in favour now amid the geopolitical tensions and the supply constraints. But, in the years ahead, investors are unlikely to buy these shares.
Both foreign institutional investors and domestic corporates are slowly moving away from investment in fossil fuel-based companies,” said an analyst with a consulting firm who did not want to be named as the firm advises companies in the coal sector.
Queries sent to the coal ministry and CIL remained unanswered until press time.
According to an annual action plan prepared by the coal ministry, the cabinet note for the listing of Central Mine Planning & Design has been submitted for approval after consultations with other relevant ministries, and a draft note for Bharat Coking Coal’s listing has been sent for inter-ministerial discussions.
Experts said the Centre’s plan is in line with its target of privatising or selling stakes in noncore businesses.
For FY23, the government has set a disinvestment target of ₹65,000 crore. However, the listings of Bharat Coking Coal and Central Mine Planning & Design may spill over to the next fiscal year. Initial public offerings (IPOS) of state-run companies have been a major source of nontax revenues for the government. For example, the mega IPO of Life Insurance Corp. of India fetched the government ₹20,557 crore, although it was listed at a discount amid weak investor sentiments because of global uncertainty because of the war in Europe.
The government is also considering the merger of Mineral Exploration Corp. Ltd with Central Mine Planning & Design. “Keeping in view the scope for its business expansion in other minerals, the government has plans for its strengthening, for which it is being considered to merge the two companies,” said a coal ministry statement in April, adding that Central Mine Planning & Design will continue to be a CIL unit.
CIL has ramped up production to meet the power demand following the power crisis in April. India’s coal production touched a record level of 777 million tonnes in FY22.
The government owns 66.13% of CIL. At the time of its IPO in 2010, it was the largest such offering in the country. The miner is currently valued at ₹1.14 lakh crore.
Amid a worldwide push towards cleaner energy, CIL is also diversifying into aluminium production, solar power generation and coal gasification as it seeks to decarbonize its operations.
MUMBAI: Banks’ gross non-performing assets (NPAS) may climb to 9.5% by March 2023 from 5.9% in March 2022 in case of severe stress, the Reserve Bank of India (RBI) said in a bi-annual report on Thursday.
“Macro stress tests reveal that all banks would be able to comply with minimum capital adequacy norms even in a severe stress scenario, although some segments, as well as non-banking financial companies, may be vulnerable to liquidity shocks,” the RBI’S Financial Stability Report (FSR) said.
Under the RBI’S estimate of baseline stress, gross NPAS may improve to 5.3% by March 2023, taking into account the proposed sale of bad loans to National Asset Reconstruction Co. Ltd (NARCL).
GNPAS may rise to 10.5% from 7.6% for public sector banks and to 5.7% from 3.7% for private banks.
In his foreword to the report, governor Shaktikanta Das noted that the overall resilience of financial institutions should stand the economy in good stead. Stress test results presented in the FSR demonstrate that banks are well-positioned to withstand even severe stress scenarios without falling below the minimum capital requirement, he wrote.
Credit concentration risk and equity price risk may not be substantial, but banks—especially public sector banks—which have substantial unrealized losses in their books at the beginning of the interest rate tightening cycle portend risks to their financial health, the report said, citing a sensitivity analysis.
The banking system’s asset quality improved this year, with the GNPA ratio declining to a sixyear low of 5.9% in March 2022 from 7.4% in March 2021.