BCCL IPO To Boost Value Of India's Coking Coal Assets, Parent Firm To Pocket OFS Proceeds

Bharat Coking Coal Ltd (BCCL), a subsidiary of Coal India Ltd, has entered the capital markets with its initial public offering (IPO) as part of the government's disinvestment programme.

Unlike many public sector listings that raise fresh capital for business expansion, BCCL IPO is a pure offer for sale (OFS), with all proceeds going to parent Coal India.

The primary objective of the listing, according to company's management, is to unlock the true value of India's coking coal assets, which were earlier not fully reflected in Coal India's overall valuation.

“Coal India has eight subsidiaries, but BCCL is unique because it produces coking coal while the others focus on non-coking coal. The real value of coking coal was not being reflected earlier, so Coal India decided to offload a minority stake,” said Mukesh Agarwal, Director, Coal India told NDTV Profit.

The decision to list BCCL is part of a broader strategy to unlock value from the group's subsidiaries while strengthening Coal India's financial position. “The proceeds from the IPO will go to Coal India and will be used for our large capital expenditure programme over the next five years across multiple areas of the coal value chain,” he said.

Since the IPO is structured entirely as an OFS, BCCL will not receive any fresh funds from the issue. However, Manoj Kumar Agarwal, Chairman and MD, BCCL said this will not affect the company's capital expenditure or growth plans.

“BCCL's projected profits are more than Rs 2,000–2,500 crore every year, with depreciation of around Rs 400 crore. Our annual capex requirement is only about Rs 1,000–1,200 crore, so we are fully capable of meeting our capex needs and paying dividends to shareholders,” he said. Coal India, meanwhile, plans to deploy the IPO proceeds to fund modernisation, capacity expansion, and infrastructure development across its operations.

Strong Resource Base, Long Mine Life

BCCL's long-term outlook is underpinned by a strong resource base. The state-run company holds around 7.9 billion tonnes of coking coal reserves, giving it a mine life of more than 100 years at current production levels. It currently produces about 40–41 million tonnes of coal annually and accounts for nearly 58.5% of India's total coking coal output.

“Our reserves are close to eight billion tonnes. Even if we produce an average of 50 million tonnes per year, the mine life exceeds 100 years. There is no shortage of coking coal, and BCCL remains the country's prime producer,” Manoj Kumar Agarwal said.

Production is expected to rise steadily to around 54 million tonnes by FY30, with an annual growth of roughly two million tonnes. He noted that BCCL's contribution to Coal India's overall production may appear modest in volume terms, but its strategic importance is far greater due to the critical role of coking coal in steel manufacturing.

Limited Regulatory and Operational Risks

The management also downplayed concerns around regulatory approvals and operational risks. Most of BCCL's mines already have the necessary environmental and forest clearances in place.

“There are only one or two small patches where approvals are pending. Environmental and forest clearances are not a hurdle for us,” Manoj Kumar Agarwal said.

On the long-standing issue of underground fires in the Jharia coalfield, he said the situation has improved significantly. “Earlier, the fire-affected area was about 15.5 square kilometres. Now it has come down to nearly 1.5 square kilometres. We have skilled manpower to deal with the fires, and coal will be extracted without any hindrance.”

Manoj Kumar Agarwal added that Coal India continues to invest in technology and safety measures to ensure sustainable mining practices across its subsidiaries.

Focus on Washed Coal for Steel Sector

To support India's expanding steel industry, BCCL is focusing on improving the quality of its coal through washing. The company currently operates five washeries with a total washing capacity of 13.65 million tonnes. It plans to commission three new washeries and monetise older ones, doubling washing capacity to around 27–28 million tonnes by FY30.

“In the coming years, our washing capacity will double. This will improve the supply of clean, washed coking coal to the steel industry,” Manoj Kumar Agarwal said.

India remains dependent on imports for high-grade coking coal, and BCCL's washeries expansion is expected to improve domestic availability while supporting the country's infrastructure and manufacturing ambitions.

Diversification Into Renewables and CBM

As India transitions towards cleaner energy, BCCL is also diversifying beyond coal. The company has commissioned a 50 MW solar power plant and plans to scale this up to 100 MW in the next two years and 200 MW in the medium term.

“This will support our net-zero policy and reduce our carbon footprint,” Manoj Kumar Agarwal said. BCCL is also investing in coal bed methane (CBM) projects, with one plant in an advanced stage of development and expected to start production by 2027–28, while another project is in the early stages.

“CBM extraction will not only produce methane as a clean fuel but also make our underground mines safer by reducing gas levels,” he explained. Mukesh Agarwal said such initiatives align with Coal India's broader strategy to balance energy security with sustainability.

Post-Listing Governance and Dividend Policy

Post-listing, BCCL will continue to enjoy operational and pricing autonomy as a Coal India subsidiary. However, the company expects higher standards of transparency, corporate governance, and accountability to minority shareholders.

“The listing will enhance governance, transparency and accountability towards stakeholders,” Manoj Kumar Agarwal said. Dividend payouts will follow the Department of Investment and Public Asset Management (DIPAM) guidelines applicable to all Coal India subsidiaries.

With strong cash flows, a dominant position in India's coking coal supply, and a long reserve life, BCCL IPO marks a significant step in Coal India's value-unlocking strategy.

The listing not only gives investors exposure to a critical segment of India's industrial supply chain but also supports the government's broader push to unlock value from public sector enterprises while funding future growth.