Coal India's Impressive Capex Growth and Ambitions for Fiscal Success

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Coal India's Impressive Capex Growth and Ambitions for Fiscal Success
Credit: © Reuters.

By Aayush Khanna

Coal India Ltd (NS: COAL ) (CIL) has reported a notable surge in its capital expenditure (capex), marking a robust financial performance for the eight months ending November in FY24. The capex witnessed an increase of INR 741 crores, reaching INR 10,492 crores—an impressive 7.6% growth compared to the same period last year, which stood at INR 9,751 crores.

An executive from CIL expressed the company's ambitious target of achieving approximately 80% of the total capex for the current financial year by the end of the third quarter in December 2023.

The strategic focus on fortifying coal evacuation infrastructure within mining areas has driven capex under three key heads to INR 3,247 crores, representing 31% of the total capex until November 2023. This includes investments in setting up railway sidings and corridors, construction of coal handling plants (CHPs), and the establishment of roads.

A substantial portion of capex, amounting to INR 2,486 crores, was allocated for land acquisition and related rehabilitation, contributing nearly a quarter to the April-November FY24 period. Additionally, investments in heavy earth-moving machinery (HEMM) totaled INR 1,954 crores, while diversification efforts and joint ventures, including initiatives in solar and fertilizers, accounted for INR 1,040 crores.

The executive highlighted the significance of capex in catalyzing production growth, with a particular emphasis on coal evacuation infrastructure to accommodate increased volumes in the future.

For FY24, CIL continues its focus on transport infrastructure projects, allocating a significant portion of its capex—INR 6,441 crores—to three key areas. This substantial investment reflects the company's commitment to enhancing its operational capabilities and ensuring future revenue growth.

CIL's Capex trajectory has seen a significant upswing since FY22, doubling over the FY21 level and maintaining a steady growth curve in the subsequent years. With a track record of surpassing budgeted targets for three consecutive financial years until FY23, CIL remains optimistic about exceeding this fiscal year's target, marking a remarkable fourth year of consecutive growth in capex.


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