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Following the central government’s directive to increase capital expenditure to boost the economy and backed by investments in heavy earthmoving machinery and land, Coal India Ltd (CIL) registered around 109 per cent growth in capex in FY-21.
The state-owned miner entailed a total capital expenditure of ₹13,115 crore in 2020-21, compared with ₹6,270 crore during the previous fiscal.
The growth in capex comes amid the Covid slump and at a time when the centre had advised CPSEs of the country to scale up their expenditure to boost the economy, said a press statement issued by the company.
In January this year, the country’s largest miner had scaled up its capital expenditure budget by an additional ₹3,000 crore, revising it to ₹13,000 crore for the ongoing fiscal. This was a 30 per cent jump over its original capex target of Rs 10,000 crores for FY21.
Capex funding
“The entire capital expenditure was funded through internal resources. Capex growth during all the four quarters of FY-21 was significantly higher compared to the previous year. Progressive up to December-20 also our capex utilization was more than what was mandated by Ministry of Coal,” a senior company official said in the statement.
Procurement expenditure of heavy earth moving machinery was up by 284 per cent at ₹3,453 crore during FY21, compared with ₹900 crore during the previous fiscal while that on land was up by 80 per cent at ₹2,470 crore, as against ₹1,369 crore.
Capex in joint ventures, in proportion to CIL’s shareholding, such as Talcher Fertilizers Ltd and Hindustan Urvarak & Rasayan Ltd accounted for ₹2,194 crore. CIL’s coal evacuation initiatives include setting up coal handling plants, silos and constructing sidings for ₹1,398 crore. This apart, the company spent close to ₹1,166 crore on rail corridors and railway lines.
“The high capex will yield positive results to the company in ensuing years in terms of production and coal transportation,” the official said.
CIL registered a laggard growth in both production and offtake during FY21 due to Covid-led lack of demand, had been witnessing a pick up in the growth momentum since August-September 2020.
However, during the last fiscal year, coal production witnessed a marginal decline of around one per cent at 596.2 mt in 2020-21, against 602.1 mt during the previous fiscal. The offtake was also down by a little over one per cent at 573.8 mt compared to 581.4 mt in FY-20.
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