Fuelling growth: Coal India raises capex budget by 30% to ₹13,000 crore for FY21

Our Bureau Kolkata | Updated on January 13, 2021

The major heads identified for capex include land acquisition, upgrade of rail evacuation infrastructure and mine development

Coal India Ltd (CIL) has scaled up its capital expenditure budget by an additional ₹3,000 crore, revising it to ₹13,000 crore for the ongoing fiscal. This represents a 30 per cent jump over the company’s original capex target of ₹10,000 crore for FY-21.

Of the additional ₹3,000 crore injected into CIL’s capex budget, South Eastern Coalfields, the company’s largest coal producing subsidiary, accounts for ₹800 crore followed by CIL with ₹585 crore, Mahanadi Coalfields with ₹550 crore and Central Coalfields take up ₹460 crore, said a press statement issued by the company.

Some of the major heads CIL has identified for capex are land acquisition, procurement of heavy earth moving machinery, upgrade of rail evacuation infrastructure and mine development. A higher capex on these would help boost the company’s production.

Stimulating activity

The upsurge comes at a time when the government has directed the central PSUs of the country to step up their capital expenditure to stimulate economic activity.

CIL registered around 166 per cent growth in capex at ₹7,801crore during the first nine months of the fiscal ending December 2020, compared to ₹2,930 crore in the same period last fiscal.

“In the process, CIL has utilised 78 per cent of its total original capex budget during April-December’20. CIL was directed by the Ministry to achieve ₹7,500 crores capex utilisation by the closure of December’20 against which the actual capex utilisation was ₹7,801 crore,” a senior company executive said in the release. The capex for the third quarter ending December’ 20 was close to ₹2,778 crore, which is a growth of around 90 per cent against ₹1,463 crore same quarter last year.

While the company’s land possession and civil construction jobs, among other activities, were hamstrung during the Covid slowdown, subsequently headway could be made with the situation improving post unlock, nudging its increased capital expenditure.

CIL, which saw growth lagging in both production and offtake during the beginning of this fiscal, has been witnessing a pick-up in the growth momentum since August-September. The company is hopeful of surpassing last year’s production of 602 million tonnes (mt) backed by a steady pick-up in demand. “CIL will be closely monitoring the progress of the capital expenditure to achieve the revised target of ₹13,000 crore in the current fiscal,” the executive said.

Published on January 13, 2021

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