Thu,7 Jul, 2011,
By Debjoy SenguptaDebjoy Sengupta, ET Bureau
KOLKATA: Despite being a maharatna company, Coal India will now require finance ministry's approval on the estimated internal rate of return on investment it makes for acquiring 15% in Peabody's Wilkie Creek mining project in Australia.
According to norms, a maharatna company can invest 15% of its net worth in a single project for establishing a new venture or undertaking an acquisition with a cap of Rs 5,000 crore without taking government approval. The Wilkie Creek acquisition, however, is valued by experts at just about $120 million ( 540 crore).
Confirming the development a senior CIL official said that the board of directors had referred the decision to the coal ministry which in turn has referred it to the finance ministry for a final approval. It is currently waiting approval of the finance ministry.
The Coal India board has also sought clarification from the coal ministry on issues related to acquiring unlisted companies. While, Coal India was directed by the ministry to invite expression of interest for acquiring assets from listed companies only, the assets for which negotiations are going on, are not individually listed in any stock exchanges. The board has requested the coal ministry for its views on such acquisitions.
The plan is to hive off the Wilkie Creek mine in Queensland, Australia , by Peabody, into a separate company in which Coal India will take a 15% stake while rest of the holding will remain with Peabody. This separate entity will not be listed at least initially.
Following both the ministry's nod, the proposal will be referred again to Coal India board for a final clearance paving the way for the deal to be signed.
The coal behemoth which also is in talks with a couple of other foreign companies including Peabody for acquiring coal bearing assets has earmarked a total of Rs 6,000 crore for acquisitions this year, chairman NC Jha had said earlier.
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