Govt clears MCL IPO; Coal India may dilute up to 25% stake

The approval was granted by the Alternative Mechanism (AM) after the Department of Investment and Public Asset Management (DIPAM) and the Ministry of Coal processed the proposal based on approvals accorded earlier by the boards of Coal India and MCL.

According to Coal India’s stock exchange filing, “CIL may disinvest its stake in MCL through Offer for Sale (OFS) of existing shares as part of the IPO of MCL and subsequently in one or more tranches.”

The filing further stated that “MCL may raise capital through fresh issue of equity shares as part of the IPO and/or through subsequent FPO(s), QIP(s), or other SEBI-approved methods.”

Capital Raising Structure

Coal India said the disinvestment and capital raising could be undertaken simultaneously or separately in multiple tranches, with the overall dilution capped at reduction of Coal India’s shareholding in MCL by up to 25 per cent.

“The proposed listing of MCL shall remain subject to prevailing market conditions and completion of all necessary statutory and regulatory formalities,” the company said in the filing.

Unlocking Value

The development comes months after Coal India’s board approved plans in December for listing of MCL and South Eastern Coalfields Ltd (SECL) as part of the government’s broader strategy to unlock value from state-run mining assets.

“This helps in Coal India’s capex planning and provides greater financial flexibility for future expansion and investment requirements amid rising domestic coal demand driven by thermal power generation,” a senior Coal India official said, who is aware of the development.

MCL is among Coal India’s largest subsidiaries and operates major coal mining projects in Odisha, one of India’s key coal-producing states.

Coal India accounts for more than 80 per cent of India’s domestic coal production and remains central to the country’s energy security strategy as electricity demand and coal consumption continue to remain elevated.