Sat, 21 Aug 2010 10:01:56 GMT

Illegal mining may impede divestment in Coal India

New Delhi: The recent spurt in illegal mining activities across mineral mines, including coal mines, in the country could create hurdles for Coal India Ltd to garner valuations from its initial public offer (IPO) to be launched later this year.

Illegal mining may impede divestment in Coal India

'Won't affect IPO'

Merchant bankers for the issue, however, were not worried about illegal mining posing any major risk for valuations. "Although illegal mining is an issue for every mining company in our country, it is not a big issue for a company of the size of Coal India. It's a standard procedure to do due diligence and bring to the attention of investors all the risks associated with the offer," said a merchant banker for the issue.

Adding: "Coal India, with a production of 430 million tonnes last fiscal, is the largest coal mining firm in India. It is certain to get better valuations."

Industry analysts had similar views. "Illegal mining is not too much of a problem for Coal India, as anybody involved in such an activity will have to mine huge volumes to derive any gain. Though, pilferage and theft, from stocks or during transfer through the railways, is a major issue," said a senior analyst from an accounting and consultancy firm.

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