Mr. Partha S. Bhattacharyya, Chairman and Managing Director, Coal India Limited, holds a post graduate degree in physics from Jadavpur University, Kolkata, and a diploma in finance from ICFAI University, Hyderabad. He is also a Fellow of the Institute of Cost and Works Accountants of India and the World Academy of Productivity Science. Mr. Bhattacharyya joined Coal India as a management trainee in 1977. Prior to joining our Coal India, Mr. Bhattacharyya was the Chairman and Managing Director of BCCL, where he played a crucial role in the turnaround of the company, which had been reporting losses since its inception.
Coal India Limited (CIL) - a Schedule 'A' 'Navratna' Public Sector Undertaking under Ministry of Coal, Government of India, has its Headquarters in Kolkata, West Bengal. We produce non-coking coal and coking coal of various grades for diverse applications.As of March 31, 2010, the company operates 471 mines in 21 major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed mines (includes both open cast and underground mines). CIL also operated 17 coal beneficiation facilities with an aggregate designed feedstock capacity of 39.40mn tons per annum. CIL intends to develop an additional 20 coal beneficiation facilities with an aggregate additional proposed feedstock capacity of 111.10mn tons per annum. Besides CIL provides 85 hospitals and 424 dispensaries. The Indian Institute of Coal Management (IICM) operates under CIL and imparts multi disciplinary management development programs executives. Coal India's major consumers are the power and steel sectors. Others include cement, fertiliser, brick kilns etc.
Anil Mascarenhas of IIFL lists the key highlights of a media interaction where Mr. Partha Bhattacharyya says, "CIL will be able to better its margins by raising the level of washed coal to 40% of total production from the current 3%."
What are the key highlights of the issue?
Coal India plans to raise ~Rs151billion through the IPO. We have set aside Rs60bn to acquire coal mines in the US, Australia, Indonesia and South Africa. CIL will offer the shares between Rs225 to Rs245 per share.
The offer opens for subscription on October 18, 2010 and will close on October 20, 2010 for QIBs and on October 21, 2010 for Retail and Non-Institutional Bidders (including Eligible Employees Bidding under the Employee Reservation Portion) respectively. The minimum bid lot has been fixed at 25 Equity Shares. The Offer has been assigned a 5/5 grading by ICRA, CRISIL and CARE indicating that the fundamentals of the Offer are strong relative to other listed equity shares in India.
A discount of 5% to the Offer Price determined pursuant to the completion of the book building process shall be offered to Retail Individual Bidders and eligible employees. The excess amount paid at the time of bidding shall be refunded to the retail individual bidders and eligible employees.
What steps are you taking to improve margins?
We will go for washing of coal in a big way. Margin growth will be dominant focus. Our strategy will be to focus on improving the quality of coal rather than just raising output. When we wash coal, we create a product of comparable quality to imported coal and we should be able to price it much better. We will raise the level of washed coal to 40% of total production from the current 3%.
Our intention is to have a beneficiation plant in all open-cast mines with a production capacity of 2.5mn tons per annum. Coal India will invest Rs27.85bn to set up 20 coal beneficiation plants with a cumulative capacity of 110mn tons.
What about inorganic growth?
The company has set aside US $1.2bn for overseas acquisitions this fiscal year. We are evaluating a couple of proposals for buying stakes in overseas coal companies. We are entering into joint venture for developing two coal blocks in Mozambique. We have commenced the due diligence process and are evaluating proposals for acquisition of coal assets globally. We have joined hands with SAIL, NTPC, NMDC and Rashtriya Ispat Nigam for looking at acquiring coal assets outside the country.
How much of your sales are through the spot market?
During the June quarter, CIL sold 9.30mn tons in the spot market through e-auction and 45.73mn tons was put on e-auction last fiscal. We intend to sell at least 10 per cent of our total production in the spot market for better realizations.
Being a monopoly would you be able to effect a price hike given the demand-supply mismatch?
We have not immediate intentions of raising prices. The Government has not intervened in fixing prices after the sector was deregulated in 2000. However, we always consult the Government before revision in prices. That is because coal is an important raw material for various industries and any price rise could directly impact inflation.
Brief us on your financials
Coal India registered a turnover of Rs470bn last fiscal and a net profit of Rs96bn. CIL has a cash surplus of Rs380bn.
Environmental delays have been an issue with Coal India. How do you see the situation going forward?
Yes, environmental approvals to prospect for more reserves take as long as seven years. We have ~115 projects that faced delays in obtaining land and environmental permits. In order to step up the growth rate, we need these delays to be curtailed.
What is the mission of Coal India Limited?
The Mission of Coal India Limited is to produce the planned quantity of coal, efficiently and economically with due regard to safety, conservation and quality.