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Proposal to Break Coal India Down Into Smaller Public Companies

In a bid to make the coal producing monolith Coal India Ltd into a more nimble entity which can respond to change and thereby meet the energy needs of growing India, the government is looking to break the coal producer up into separate companies.

Indian Economic News | State Owned Enterprise | Public Sector | Government CIL
Indian Economic News | State Owned Enterprise | Public Sector | Government CIL
Nov. 4, 2012 - PRLog -- India’s latest five-year plan, its 12th covering the years 2012-2013 through 2016-2017, recommends breaking up Coal India Limited (CIL) into separate public sector companies, sources within the government revealed.

Although the plan has been approved by the Cabinet Committee on Energy, it is yet to be officially released.

In its current form, the plan questions the current structure of CIL as a holding company. It suggests spinning off CIL subsidiaries into separate public sector companies to develop their own strategies of coal development, including JV activities and acquisition of coal reserves abroad. The plan suggests the creation of a high level committee to examine the issue and to submit a report within six months.

CIL, the single largest coal producer in the world, is a holding company consisting of nine fully owned subsidiaries: Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), Eastern Coalfields Limited (ECL), Mahanadi Coalfields Limited (MCL), Northern Coalfields Limited (NCL), South Eastern Coalfields Limited (SECL), Western Coalfields limited (WCL), Central Mine, Planning and Design Institute Limited (CMPDIL), and Coal India Africana Limitada (CIAL). It also operates the Indian Institute of Coal Management (IICM).

CIL went public in 2010 when the government disinvested 10% of its ownership in the company, becoming in 2011, briefly, the most valued company in India by market capitalization. CIL subsidiaries are spread over 34 districts in 8 states within India, last year reporting revenues of about US$12B and profits of $3B. It is the country’s single largest employer and tax payer.  

Critics charge the company has not been able to increase production fast enough to meet growing demand and that it may have become too big with too much entrenched interest to be able to respond to India’s energy requirements.

Measures to change CIL’s structure will be contentious. For more information on details of the plan, contact us for a free copy of Energy Publishing’s Indian Coal Report.  With staff on the ground in India and the benefit of experienced journalists and analysts across the Asia Pacific region, the Indian Coal Report offers the latest news, in-depth analysis, market briefs and freight indices.  Contact us at marketing@energypublishing.biz or visit http://coalportal.com/ for a free trial subscription.

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