MUMBAI, Aug 7: Coal India Ltd (CIL) has decided to restructure the capital base of its subsidiary companies.

In a recent meeting, the board of directors observed that in order to meet the debt covenant, the amount of debt to equity swap needs to be increased in respect of ECL (Eastern Coal Field Ltd) and BCCL (Bharat Coking Coal Ltd) and reduced in case of MCL (Mahanadi Coal Ltd). Similarly, the amount of reverse swap from equity to debt in NCL (Northern Coal Field Ltd), SECL (South Eastern Coal Field Ltd) and WCL (Western Coal Field Ltd) needs to be increased.

With these changes in the swap amount, the subsidiary companies and CIL as a whole are expected to individually and collectively meet the covenant of debt being at or below 60 per cent of total capital.

For the debt to equity swap, there will be an increase of equity for ECL, BCCL and MCL for Rs 994 crore, Rs 1,180.70 crore and Rs 86.40 crore respectively. While in the swap of equity to debt, there will be a reduction of equity in WCL, NCL and SECL of Rs 413 crore, Rs 1,000.80 crore and Rs 761.30 crore respectively.

In this respect, ECL and Bharat Coking Coal have been advised to increase their authorised capital from Rs 1,200 crore to Rs 2,500 crore respectively.The aggregate of debt to equity swap was exactly identical to the equity to debt swap in the earlier proposal approved by the board. However, in the current proposal, the aggregate of debt equity swap exceeds the equity debt swap by Rs 85 crore.

This net excess is designed to ensure that CIL's holding of equity in its subsidiary companies (Rs 6,231 crore at present) is increased by Rs 85 crore so as to reach the level of Rs 6,316 crore, which is exactly the equity held by the government in Coal India L. In effect, the net excess is now proposed to remove the existing mismatch between equity held by CIL subsidiary companies and the equity held by the government in Coal India .

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