State-run Coal India (CIL) will kick off investor roadshows on Tuesday, ahead of its proposed follow-on public offering (FPO), even though a timeline for the FPO is still to be finalised.

At the current market price, the sale of an additional 5% stake in CIL will fetch the government roughly R9,000 crore.

The stock closed flat at R287.70 on the Bombay Stock Exchange on monday. Shares in the company have underperformed the benchmark indices, slipping close to 20% since the start of this year.

Investor roadshows will start in the US and the UK, with top management officials, including the chairman, scheduled to meet investors in New York, Chicago, San Francisco and London in the first phase.

The second tranche of roadshows would be held in Singapore and Hong Kong after the company announces its second quarter results. The roadshows in India would be held in the last lap, said a company official.

?Investors have many apprehensions,? said CIL chairman Narsing Rao in an interview with Bloomberg. ?Concerns about our profitability are exaggerated,? he added.

Coal India saw a 16.5% dip in consolidated net profit to R3,731 crore for the quarter ended June 30, 2013 due to a jump in operational costs and an increase in the proportion of sales under fuel supply agreements (FSAs), which hurt profitability. Earnings for the quarter ended September 30, 2013 are scheduled to be announced on November 12.

Goldman Sach, Credit Suisse, Deutsche Bank, SBI Caps, Kotak Mahindra Capital, JM Financial and Merrill Lynch are the seven selected merchant bankers for the issue.

The company is no longer considering the option of a buyback, said officials. Instead, the government will offer up to 31.58 crore shares, of which 10% would be reserved for employees at 5% discount.

?We are no longer considering the buyback option,? CIL director personnel R Mohan Das told FE. The company was earlier considering a buyback offer if the trade unions didn?t allow the 5% divestment to happen. While trade unions are still opposing it, they have softened their stand after assurances from the finance minster, said officials. The government was forced to reduce the size of the follow-on offering from 10% to 5% due to opposition from unions.

CIL was listed on the bourses in 2010 after the government sold 10% stake in the company, raising R15,199 crore through the public issue.

With inputs from Bloomberg