Coal India's capex grows 65% to USD 30.34 billion in June quarter

Coal India Ltd. (CIL) has reportedly ramped up its capital expenditure (capex) by 64.8% to USD 30.34 billion in the June quarter of 2022-2023 from USD 18.41 billion in the previous year. This was primarily due to improved spending on land acquisition and transportation infrastructure in its coalfields as part of the first-mile connectivity (FMC) initiative.

For those unaware, FMC is a coal company project to minimize environmental emissions in which coal is shipped for loading via a conveyor system from coal processing plants to storage areas.

The company said in a statement that maintaining its rise in capex for the ninth quarter in a row, it has accomplished a solid 66% expansion in the first quarter this year over the equivalent quarter last year.

A senior company official said that the uptick in capex was driven by these two crucial elements that have assisted CIL in broadening its mining activities for expedited manufacturing and combining them with streamlined coal transportation.

Sources claim that land acquisition at USD 6 billion accounted for almost one-fifth of total capex in the first quarter. This is nearly 2.3 times the USD 2.68 billion spent between April and June 2021-22. The money was spent throughout CIL's business units.

Capital expenditure under FMC projects for the construction of coal handling plants, silos, and weighbridges had totaled at USD 5.77 billion. This is significantly more than the USD 1.41 billion spent in the first quarter of the previous fiscal. Whereas rail corridor laying and rail sidings amounted to USD 5.71 billion, representing a 57% increase.

It is worth noting that CIL makes up for more than 80% of domestic coal yield and so far this year, CIL's production tempo has maintained a healthy double-digit growth rate, and all efforts are underway to uphold the pattern.

However, having a corresponding evacuation infrastructure that can oversee the increased production is the need of the hour for the company.

Source credits:

https://www.business-standard.com/article/companies/coal-india-s-capex-rises-65-to-rs-3-034-crore-in-june-quater-of-fy23-122071100731_1.html