Coal India abandons share offer as investor scepticism grows.

Huffington Post: “In October 2010, Coal India, then the world’s largest coal miner, was seen as one of the most valuable equity investments in the emerging economies.”
“With its 1.2 billion strong population and a healthy growing economy, India seemed primed to devour plenty of cheap coal. Coal India with a virtual monopoly over coal supply was set to feed this hunger and provide enormous profit for shareholders. But 2013 was Big Coal’s Annus Horribilis and even Coal India wasn’t spared.
As recently as late 2013 a veritable who’s who of big global banks were lining up to broker Coal India (CIL)s 10% share offering despite widespread warnings of human rights and environmental violations. The offer was expected to boost Coal India’s share price, raise the company’s profile as a desirable investment and raise billions of dollars for the Indian government. The financial media breathlessly hung on every non-announcement about the impending share sale. They continually prophesied the biggest share offers ever seen in the Indian market, a sign that all was well with India’s troubled coal sector.
Fast forward to January 2014 and the dream is dead – maybe for good. After many delays and uncertainties, Coal India finally called off its share offer, ostensibly because of adverse market conditions and labour protests. Instead, it has announced a special dividend, which will ensure the Government of India (which owns 90% of the company) gets the revenue it wanted. This dividend is more than the company’s total profit in 2013 and possibly more than its profits this year. Meanwhile, the share price continues to linger at around 250 Rupees, which is about where it was when it was listed on the exchanges in 2010. So far, shareholders don’t have much to show for their investment.”
….So where does all this leave India’s huge pipeline of new coal plants? High and dry. CIL looks on track to miss its production target for the period from April 2013-March 2014 by 10-15 million tonnes – the fourth consecutive year it has failed to meet its target. With protests from affected communities and environmental groups growing louder every day, accessing new reserves (most of which lie in forest areas) is getting increasingly difficult for the company, setting the stage for a slow but inevitable decline.”