Date:18/04/2007 URL: http://www.thehindubusinessline.com/2007/04/18/stories/2007041805470100.htm

Back Coal blocks purchase abroad: Steel Ministry draws SPV shareholding pattern

Ambarish Mukherjee

Major participation
Public sector units SAIL, RINL and NTPC would chip in Rs 1,000 crore each.
NMDC, Coal India would contribute Rs 500 crore each.
No bar if some more units want to participate.

New Delhi April 17 The Steel Ministry has finally prepared the shareholding pattern of the proposed special purpose vehicle (SPV) that would be promoted jointly by several public sector companies to acquire coal mines abroad.

The Ministry had circulated a notice last week where it had proposed that the SPV would have a paid-up capital of Rs 4,000 crore.

The five public sector units that would initially participate in the SPV are Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL), National Mineral Development Corporation (NMDC), National Thermal Power Corporation (NTPC) and Coal India Ltd (CIL).

While SAIL, RINL and NTPC would chip in Rs 1,000 crore each, NMDC and Coal India would contribute Rs 500 crore each, sources said.

However, there would be no bar if some more public sector units want to participate in the SPV, officials said. They added that the shareholding pattern of the new company would be in proportion to the coal requirements of each company. "With an equity base of Rs 4,000 crore, the new company can leverage on this and raise another Rs 8,000-10,000 crore from lenders and would have a total investible funds in the range of Rs 12,000-14,000 crore. This would put it in a strong position for acquisitions anywhere in the world," sources said.

Once the opinion of other ministries such as the Coal, Finance and Law is available by month end, the proposal would be placed before the Cabinet for a final clearance, sources said.

Initially, however, SAIL had been looking at a number of mines in countries such as Indonesia, Australia, Russia, but no final decision has yet been taken.

Currently, both SAIL and RINL import around 70-80 per cent of their coking coal requirement because domestic coking coal reserves are of poor quality.

Acquisition of coal properties abroad would enable the steel companies to save on costs. On the other hand, CIL and NMDC would be using the coal to increase availability in the domestic market.

Another aspect to be considered by the Cabinet is whether the SPV could be granted Navratna status for greater autonomy and flexibility in the decision-making process.