Budget 2024 Expectations: Coal India to have Rs 80,000 crore capex over next 5 years: CMD PM Prasad

Coal India Limited (CIL), India's biggest miner, will spend Rs 80,000 crore as capital expenditure (capex) over the next five years to achieve its target of raise production to one billion tonne a year from FY26 and diversify into thermal and renewable power generation, chairman and managing director (CMD) PM Prasad has said.

"There is huge demand for coal in India since the power sector is growing even beyond the projections of the Ministry of Power. So in fact till 2040, coal is going to remain a mainstay in the Indian context.

“But, our targets have currently been consolidated till the year 2030, based on which I can say that CIL will have a capex of at least Rs 80,000 crore for the next five years in total," Prasad said in a post-earnings call on November 21 evening.

In FY23, CIL exceeded its capex target. The Central Public Sector Undertaking’s capex was Rs 18,619 crore against a target of Rs 16,500 crore. In the first half of FY24 (April to September), the capex was Rs 7,739 crore. The target for FY24 is Rs 16,500 crore.

CIL reported a 12.5 percent year-on-year rise in consolidated net profit at Rs 6,800 crore for the quarter ended September 30, 2023.

It has set a target of one billion tonne of annual coal production for FY26. For FY24, the target is 780 million tonnes (MT), almost half which was meet in the first seven months.

The production target for the next year is 850 MT, 9 percent higher than that for the current year. To support the increase in volumes, Coal India is also investing in setting first-mile connectivity and railway infrastructure.

Prasad said CIL expects e-auction to form nearly 15 percent of its total production. The figure stands at 9 percent currently. He, however, cautioned the share of e-auction would depend on the quantum allocated to the power sector since there was an unprecedented growth in demand.

The Coal India stock has gained nearly 50 percent in 2023. It closed lower on November 21, adjusting for its recent dividend announcement. It extended losses for the second day and was quoting at Rs 331.25 at 1.44 pm on the National Stock Exchange, down almost a percent from the previous close.