With the Centre prodding central public sector enterprises (CPSEs) to privatise or disinvest stakes in their subsidiaries, Coal India will sell a 25% stake each in its unlisted subsidiaries Bharat Coking Coal (BCCL) and consultancy arm Central Mine Planning & Design Institute (CMPDI), company sources told FE. Both the companies are wholly-owned by the coal miner.
While government officials indicated that CIL may list one of its profitable subisidiaries also, company sources said it is not on the immediate agenda.
“The CIL board has given an in-principle approval for a 25% stake sale in BCCL and CMPDI, subject to government approval,” a CIL official said. The CIL board took the decision recently after the coal ministry nudged the company to undertake the stake sales as part of the measures to rationalise capital deployment. CIL will appoint merchant bankers and invite expression of interest for the stake sales soon after getting the nod from the government.
The BCCL posted a net loss of Rs 1,209 crore in FY21 compared with a net profit of Rs 919 crore in FY20 as it could only achieve a production of 24.66 MT against the target of 37.13 MT and off-take of 23.13 MT against the target of 37.13 MT. The net turnover of the company during the financial year fell 21% to Rs 6,150 crore against the previous year turnover of Rs 8,967.56 crore.
On the other hand, CMPDI achieved its highest-ever turnover of Rs 1,489 crore in FY21, with its net profit rising 64% on year to Rs 317 crore in FY21.
On May 18, the Union Cabinet empowered the boards of the CPSEs to privatise, disinvest or close their subsidiaries and sell stakes in joint ventures. The move will curtail the approval process as such proposals will not be routed through Cabinet and the relevant CPSE just needs to get an in-principle nod from a group of ministers before initiating the transaction on their own instead of relying on the department of investment and public asset management (Dipam).
The move will give a fillip to the government’s efforts to unlock capital, which are either stuck or sub-optimally employed in state assets, and put these into more productive use. Prior to the latest decision, CPSEs had the freedom to create subsidiaries and JVs, but they lacked powers to sell/exit them.
A section in the government are of the view that CIL should completely privatise some of the subsidiaries and consolidate the rest of them for a coherent business strategy to ramp up coal production to meet the rising power demand. Other subsidiaries of CIL include Eastern Coalfields, Central Coalfields, Western Coalfields, South Eastern Coalfields, Northern Coalfields, Mahanadi Coalfields and North Eastern Coalfields.
Like other state-run entities, BCCL is also weighed down by a large number of employees numbering 43,425 with a salary and wage cost of Rs 5,566 crore or 91% of its turnover in FY21. BCCL is engaged in extraction of coking and non-coking coal for supply to steel plants and power companies, fertiliser plants, cement and other sectors from its 119 coal mines.
CMPDI provides consultancy and support for mineral exploration, mining, infrastructure engineering, environmental management, and management systems, especially to the mineral, mining and allied sectors, both within and outside coal industry and the country.