Coal India gears up to acquire mines abroad

October 27th, 2008 - 8:23 pm ICT by IANS  

Kolkata, Oct 27 (IANS) The country’s leading coal producer Coal India Ltd (CIL) is planning to acquire coal mines abroad, a top official said here Monday.”The issue was discussed at the International Coal Ventures Ltd (ICVL) meeting recently,” CIL chairman Partha S. Bhattacharyya told reporters without giving details of the acquisition plan.

ICVL is a special purpose vehicle floated by five public sector units for identifying and acquiring overseas coal properties.

CIL, part of the consortium, is searching for coal mines in the US, Canada, Australia and Indonesia.

“In America, we will be interested only in metallurgical coalfields, not in thermal coal,” Bhattacharyya said.

Minister of State for Coal Santosh Bagrodia and Bhattacharyya recently visited New York and Las Vegas in the US, where they held talks with merchant bankers on proposals to acquire mines in the Appalachia region of that country.

“Talks were fruitful and acquisitions might happen within 2009,” Bhattacharyya said.

Dwelling on financial aspects of a prospective acquisition, the CIL chairman said: “We always look at enterprise value as the multiple of EBIDTA (earnings before interest, taxes, depreciation and amortisation) while acquiring.”

“This ratio which was in the range of seven to 10 has come down to somewhere around 2.5 to five at present, which means the property prices are very attractive at this time,” he added.

CIL, which recently was made a Navaratna company - giving the state-owned firm an autonomous status - will float its initial public offering in three years, Bhattacharyya said.

CIL plans to give equity shares to land losers for various future projects of the company once it is listed.

“We will like to earmark part of the company equity for the project-affected people, though nothing has been finalised yet,” he said.

The Navratna status would give Coal India and its subsidiaries the financial freedom to decide on investments of up to Rs.10 billion in domestic as well as international projects.

“We have requested the central government to create an empowered group of secretaries specially for us that will consider all investment projects of more than Rs.10 billion,” Bhattacharyya said.

Coal India’s production has gone up 6.3 percent year-on-year (YoY) in the April-September period to 167.5 million tonnes.

“We hope to achieve a production growth of seven percent in 2008-09,” Bhattacharyya said.

Sales to power plants, Coal India’s biggest customers, have gone up 5.8 percent during the period to 137.01 million tonnes.

“We understand that several power stations across the country are reeling under poor coal stock. Our dispatch record shows that we have fulfilled our commitment,” Bhattacharyya said.

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