Mahanadi Coalfields Ltd (MCL), a wholly owned subsidiary of Coal India Ltd, has filed its Draft Red Herring Prospectus (DRHP) with market regulator SEBI for an initial public offering (IPO).

The proposed issue is entirely an offer for sale (OFS), with Coal India planning to sell 66.18 crore shares, representing a 10% stake in Mahanadi Coalfields. Because the IPO does not include any fresh issue of shares, Mahanadi Coalfields will not receive any proceeds from the offering; the entire net proceeds will accrue to the selling shareholder, Coal India.

Mahanadi Coalfields is one of the largest coal-producing subsidiaries of Coal India and operates primarily in the state of Odisha. The company was incorporated in 1992 as a subsidiary of Coal India, which itself is the largest coal producer in India and among the largest in the world. Coal India, which was listed on the Indian stock exchanges in 2010, operates through several wholly owned subsidiaries, and the Mahanadi Coalfields offering would be among the listings of a Coal India subsidiary, giving investors direct exposure to the coal-producing assets in Odisha.

An offer for sale allows existing shareholders, in this case the promoter Coal India, to sell their holdings to the public. Such divestments form part of the government's broader program of stake sales in public sector undertakings, through which Coal India is majority owned by the Indian government. Following the 10% stake sale, Coal India would retain a majority holding in Mahanadi Coalfields, which would remain a subsidiary of the parent.

The filing of the DRHP marks the first formal step in the IPO process. Once SEBI completes its review of the draft papers, the company can proceed to launch the offering, subject to regulatory approval and market conditions. Details such as the price band, lot size, and listing timelines will be announced closer to the launch.

The full report is available at CNBC-TV18.