Coal sector should be de-nationalised: Ex-CIL chairman

Partha Bhattacharya feels competition in the coal mining space will aid better production.

Captive coal miners contribute only 8 percent to the total coal production.

Partha Bhattacharya

Former Chairman

Coal India

There's a lot of buzz that the new government may look at breaking up Coal India  into several smaller units and perhaps may explore other ways in which productivity may improve and the company is able to attract more foreign inflows.

Partha Bhattacharya, Former Chairman of Coal India (CIL) believes that the coal sector should be denationalized.

Also Read: Breaking up Coal India will raise availability: Centrum

Coal India is not able to meet the burgeoning power demand and the captive coal miners contribute only 8 percent to the total coal production. Even none of the state governments are core competent in coal mining, Bhattacharya told CNBC-TV18.

He feels competition in the coal mining space will aid better production and expects supply boost in the next 7-8 years if the sector is opened up to private players.

Oscar Veldhuijzen, Partner at TCI Fund Management, which is one of the largest investors in Coal India, feels that replacing imports with domestic coal will be profitable for the country, adding that faster environmental clearances will aid Coal India's production.

He believes the Narendra Modi government will focus on better coal availability.

Though he expects changes in Coal India management, Veldhuijzen does not see breaking of its monopoly as a worrying sign, nor does he think it to be counterproductive if the government retains its control on the company.

Transcript to follow

Coal India stock price

On May 22, 2014, at 11:10 hrs Coal India was quoting at Rs 398.30, up Rs 26.15, or 7.03 percent. The 52-week high of the share was Rs 401.00 and the 52-week low was Rs 238.35.

The company's trailing 12-month (TTM) EPS was at Rs 26.41 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 15.08. The latest book value of the company is Rs 32.48 per share. At current value, the price-to-book value of the company is 12.26.

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