The Finance Ministry has allowed Coal India Ltd acquire interest in unlisted coal miners in abroad, according to company Chairman, Mr N.C. Jha.
The Government, however, stopped short of granting a formal go-ahead for acquisition of assets that does not ensure the stipulated 12 per cent internal rate of return (IRR).
CIL earlier felt that the embargo on acquisition of unlisted companies or assets coupled with the 12 per cent IRR benchmark made it difficult for the company to go ahead with acquisition opportunities abroad, so as to ensure coal availability in the country.
In its recent clarification, the Government said that while the company could go ahead with acquisition opportunities offered by unlisted mining entities overseas, the Indian coal major should take clearance from the Centre before acquiring interest in assets that did not justify the minimum stipulated returns.
“The Finance Ministry felt that CIL may explore acquisition proposals offering returns below 12 per cent, for strategic reasons. However, the company should require approval of the Centre in acquiring interest in such assets,” a CIL official said.
Despite having a huge cash reserve of nearly $11 billion (Rs 55,000 crore), CIL failed to strike any major overseas acquisition deal so far.
The Coal Secretary, Mr Alok Perti, recently blamed the “intricate” Government policies for CIL's failure in acquiring assets abroad and ensuring energy security of the country. Mr Perti also said that unless rules were suitably changed, the public sector major stands little chance in the competitive global market.