No plans to enter cap mrkt through IPO: CIL
CIL is not empowered to tap the cap mrkt for raising funds and doing so would require the public sector behemoth to annul the Articles of Association it has with the Govt.india Updated: Jan 30, 2006 18:54 IST
Public sector Coal India Limited is not empowered to tap the capital market for raising funds and doing so would require the public sector behemoth to annul the Articles of Association it has with the government.
Barely 24 hours after reports quoting CIL said that the PSU was planning to launch its maiden public offer, highly- placed CIL sources said that they were "amazed at the said report. How can we do that for which we do not have the required mandate?
"We need to be clear that in the past too similar proposition did rounds but nothing came out of it as there were too many issues involved."
The report quoted sources in CIL as saying that the PSU was planning to hit the capital market with its maiden public offer of five per cent paid-up capital to raise an ambitious Rs 3,000 crore.
The report further said the entire proceeds from the proposed initial public offer (IPO) would be used to to fund the company's expansion programme, under which CIL is targeting to increase production to 571 million tonne by the end of 11th Plan period (2011-12).
Reacting to the same, Coal Ministry sources said that the said proposition of entering the capital market through the IPO route was simply untenable according to the constitution of the public sector behemoth.
"If at all the CIL intended to do so it would have to abrogate the Articles of Association it has with the government. Is CIL mandated to do that?" they asked.
They said it was true that money was needed to fund CIL's operations. Moreover, its ailing subsidiaries, BCCL and ECL too were gradually wriggling out of their fiscal morass.