Coal India April-December capex up 37.4% y-o-y; target missed

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Coal India Ltd (CIL) has reported a 37.4 percent year-on-year growth in capital expenditure in the nine months ended December at Rs 10,717 crore but has fallen short of the internal target for the period.

Coal India has been under pressure to increase output as Indian utilities face a severe shortage in the second half of 2021. The state-run coal major had set a target of Rs 17,000 crore for the capex in the current fiscal.

“The capex scale-up comes at a time when the Centre has been exhorting the public sector entities to step up their annual capex. CIL’s capex spend during the referred period marks 86.3 percent of the progressive target achievement,” the company said.

The company missed the target of a capex of Rs 12,421 crore for the period. An official from Coal India said that the capex activity typically picks up in the fourth quarter of the fiscal and the company was confident of achieving the annual target.

Talking to investors in November 2021, Chairman Pramod Agrawal had said that CIL aims to invest Rs 40,000-50,000 crore as capital expenditure in the next 4-5 years.

“Our endeavour is to keep abreast of our capex targets. However, capex will be contingent on the demand for coal, sales realisation, and production needs. The investments will be made accordingly,” said a senior executive of the company.

The company said that around 54 percent of the total capex during April-December was incurred on land acquisition, procurement of heavy earthmoving machinery, and joint ventures such as Hindustan Urvarak Rasayan Limited and Talcher Fertilizers Limited.

CIL aims to boost coal stock at thermal power plants to over 45 million tons by the end of the ongoing fiscal, the highest ever closing stock at these plants. The company has been working towards increasing output and improving stocks at thermal power plants to avoid the situation faced by many plants in October-November last year, when many thermal power plants faced a severe crunch.