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Coal India
Black Gold…
�� Size does matter
• Coal India (CIL) is the largest coal producing company in the
world, based on raw coal production of 431.3 million tons in FY11.
• As of April 1, 2010 the company has total reserves of ~18.9 billion
tonnes comprising ~10.6 billion tonnes of proved reserve and 8.3
MT of probable reserves. CIL also has huge resources of ~64.2
billion tonnes, which constitutes 51.3 billion tonnes, 9.9 billion
tonnes and ~3 billion tonnes measured, indicated and inferred
resources, respectively
• As of March 31, 2010, CIL operated 471 mines in 21 major
coalfields across eight states in India. Out of the total mines
operated, the number of open cast mines, underground mines
and mixed mines remained 163, 273 and 35, respectively.
�� Going ahead
• Over the next few years there is massive capacity addition
anticipated in the power sector, majority of which is expected in
the Thermal segment. As the power capacities come on stream
demand for coal is expected to increase considerably. On the
similar lines CIL has plans to ramp up its capacity in order to cater
to the incremental demand.
• CIL is planning to set up 20 coal washeries, with a capacity of
111.1 mtpa (million tonnes per annum) over the next few years.
Furthermore CIL is also planning to ramp up production from its
existing washeries. As washed coal commands higher realisation,
the average realisation of CIL is expected to improve. Going
forward on the back of better product mix & higher realisation the
margins are expected to expand from current levels.
• The overall profitability of the company has doubled during the
last 3 years from ~|5200 crore to ~|10800 crore registering a
CAGR of 27 %(FY08 to FY11).
Valuation
CIL enjoys monopoly status in the domestic market and contributes
~80% of the country’s total coal output. With the rising demand for coal
in India the company is very well placed as the sole supplier of coal to
industries like power, steel, cement, etc. Going forward the company is
planning to increase its beneficiated coal capacity which would lead to
margin expansion.
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