Coal Ventures ready for global arena
The Cabinet has already cleared the proposal for setting up the new entity that would function on the lines of a mega PSU with a war chest of over Rs 10,000 crore
By Subhash Narayan, TNN |
NEW DELHI: A new entity — Coal Ventures International — will pose a challenge to international players in the global coal market. Public sector companies including SAIL, NTPC, Rashtriya Ispat Nigam (RINL), NMDC and Coal India (CIL) have finalised operational details of the special purpose vehicle (SPV) that would scout for coal deals globally by pursuing an aggressive merger and acquisition (M&A) strategy.
The Cabinet has already cleared the proposal for setting up the new entity that would function on the lines of a mega PSU with a war chest of over Rs 10,000 crore.
“Senior officials of all the five promoter PSUs of the coal SPV met on Thursday and approved the name and organisation structure of the new entity. It has been decided that Coal Ventures International (CVI) would function as an investment company under its unincorporated private limited company status initially,” chairman and managing director of RINL P K Bisnoi said. Mr Bisnoi is also the architect of the coal SPV proposal.
The new company will have a three-tier organisational structure. The main board of the company would have five directors from each of the five companies. SAIL chairman SK Roongta would be the first chairman of the new entity, while Mr Bisnoi would be executive president. A chief executive officer (CEO) from SAIL would look after day-to-day functioning of the new company. ET first reported it December 2006.
The new company would have more powers than a navaratna company as it has been mandated to clear investment proposals of upto Rs 1,500 crore at the board level itself. A navaratna company currently can clear investments upto Rs 1,000 crore.
As per the Cabinet approval earlier, SAIL and CIL would contribute Rs 1,000 crore each equity for the new entity while RINL, NMDC and NTPC would put in Rs 500 crore each. Based on this equity (Rs 3,500 crore), the company would leverage debt of about Rs 6,500 crore taking the size of warchest to Rs 10,000 crore.
This is expected to be increased further to Rs 25,000 crore as CVI would aim to have 500 million tonne of metallurgical coal under its belt over next few years, said Mr Bisnoi. The new entity would also invite participation from venture capitalists, private equity firms and other private sector coal consuming companies in India and abroad as equity partners in the SPV at a later stage.
It has been suggested that the company would acquire a minimum of 11% equity in a coal project so that it secures coal produced by the overseas company. An expression of interest (EoI) would soon be invited for appointment of merchant banker to guide CVI in its acquisition strategy.
The Cabinet has already cleared the proposal for setting up the new entity that would function on the lines of a mega PSU with a war chest of over Rs 10,000 crore.
“Senior officials of all the five promoter PSUs of the coal SPV met on Thursday and approved the name and organisation structure of the new entity. It has been decided that Coal Ventures International (CVI) would function as an investment company under its unincorporated private limited company status initially,” chairman and managing director of RINL P K Bisnoi said. Mr Bisnoi is also the architect of the coal SPV proposal.
The new company will have a three-tier organisational structure. The main board of the company would have five directors from each of the five companies. SAIL chairman SK Roongta would be the first chairman of the new entity, while Mr Bisnoi would be executive president. A chief executive officer (CEO) from SAIL would look after day-to-day functioning of the new company. ET first reported it December 2006.
The new company would have more powers than a navaratna company as it has been mandated to clear investment proposals of upto Rs 1,500 crore at the board level itself. A navaratna company currently can clear investments upto Rs 1,000 crore.
As per the Cabinet approval earlier, SAIL and CIL would contribute Rs 1,000 crore each equity for the new entity while RINL, NMDC and NTPC would put in Rs 500 crore each. Based on this equity (Rs 3,500 crore), the company would leverage debt of about Rs 6,500 crore taking the size of warchest to Rs 10,000 crore.
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This is expected to be increased further to Rs 25,000 crore as CVI would aim to have 500 million tonne of metallurgical coal under its belt over next few years, said Mr Bisnoi. The new entity would also invite participation from venture capitalists, private equity firms and other private sector coal consuming companies in India and abroad as equity partners in the SPV at a later stage.
It has been suggested that the company would acquire a minimum of 11% equity in a coal project so that it secures coal produced by the overseas company. An expression of interest (EoI) would soon be invited for appointment of merchant banker to guide CVI in its acquisition strategy.
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