Coal India Limited “No Go” Concept Getting Diluted, Positive for CIL :: Morgan Stanley Research,

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Coal India Limited
“No Go” Concept Getting
Diluted, Positive for CIL
Quick Comment: According to media reports, the
environment ministry appears to be relaxing its “No-go
area” concept in practical terms, which in our view
should act as a sentimental boost for CIL stock. So far,
about 30% of India’s mining zones fall under the “No-go
area” for mining and if today’s reports prove to be true,
we believe CIL’s long-term volume growth plans could
materialize at a faster pace.

What’s New: According to today’s The Hindu, the
environmental ministry has offered to consider:
1) A reduction in the areas categorized as “No-go”
zones

2) All projects that had been granted Stage I forest
clearance, before 2009, for Stage II clearance. Such
projects would not be considered under the “No-go”
categorization at all.
3) A possible compromise on existing projects in
existing “No-go” zones to selectively approve
projects after subjecting them to strict scrutiny
4) Sending rejected projects to the Union Cabinet for a
final decision along with the environmental
ministry’s reasons for rejection
Impact on Coal India: While we have not seen an
official confirmation on this as yet, we feel if
environmental norms were to be relaxed, then CIL could
ratchet up its production at a pace of 8.5-9% per annum
beginning F15 (versus our current assumption of 7%
and 7.5% in F15 and F16).