THEBUSINESSBYTES BUREAU
NEW DELHI, NOVEMBER 5, 2026
Odisha-based Mahanadi Coalfields Ltd (MCL), Coal India's largest
coal-producing subsidiary, has received the Securities and Exchange Board of
India's (Sebi) final approval to launch its initial public offering (IPO),
paving the way for the state-owned coal major to monetise a 10 per cent stake
in the company.
Sebi issued its final observations on Mahanadi Coalfields' draft offer
documents on November 4, sources familiar with the development said on
Thursday.
The proposed IPO will be entirely an offer for sale (OFS), with Coal
India planning to offload up to 66.18 crore existing shares, representing a 10
per cent stake in its subsidiary. As the issue comprises only an OFS, Mahanadi
Coalfields will not receive any proceeds from the public offering, with the
entire amount accruing to the selling shareholder, Coal India.
The Sebi clearance marks a crucial milestone in the public listing
process, allowing the company and its promoter to move ahead with preparations
for the issue, subject to applicable regulatory requirements.
Established in 1992, Mahanadi Coalfields is a major producer of
non-coking coal, primarily catering to the power sector through its mining
operations in Odisha's Talcher and Ib Valley coalfields. Its customer base also
includes captive power plants and industries such as cement and sponge iron.
The company had 17 operational mines as of June 30, 2026, comprising 14
opencast and three underground mines. Opencast operations account for virtually
its entire coal production.
MCL produced 218.31 million tonnes of coal in FY26, accounting for around
28.4 per cent of Coal India's total output and establishing its position as the
largest producing subsidiary of the state-owned miner.
The company also commands a substantial resource base, with audited coal
reserves of 9,840.31 million tonnes, according to its draft red herring
prospectus (DRHP). At its FY26 production level, these reserves represent an
estimated production life of around 45 years, although actual extraction would
depend on mining economics, environmental clearances and other operational
considerations.
A significant portion of MCL's sales is backed by long-term customer
arrangements, providing a degree of demand visibility. Thermal power customers
accounted for 68.62 per cent of its product sales in FY26, while around 82.12
per cent of product-sale revenue was generated through long-term fuel supply
agreements.
The strong presence of power-sector customers and long-term supply arrangements underlines the company's importance in India's coal-based electricity generation ecosystem, even as such agreements place certain constraints on pricing flexibility.
The proposed listing is part of Coal India's broader efforts to unlock value from its subsidiaries through strategic stake sales and capital market listings, while providing investors an opportunity to participate in the country's coal production and energy supply chain.
