ANNUAL REPORT INSIGHTS...2020/10/01 · Edelweiss Securities Limited COAL INDIA Edelweiss Research...

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KEY DATA

Rating BUY Sector relative Price (INR) 116 12 month price target (INR) 165 Market cap (INR bn/USD bn) 715/9.7 Free float/Foreign ownership (%) 31.0/8.6

What’s Changed

Target Price ⚊

Rating/Risk Rating ⚊

INVESTMENT METRICS

Black diamond: Value at core

We analysed Coal India’s FY20 annual report. Three points stand out: i) Larger subsidiaries outscore on profitability, productivity and technological absorption. ii) Development of evacuation infrastructure to handle 1bn tonnes of coal by FY24 is underway. iii) Working capital unlocking might release cash in the near to medium term.

Meanwhile, contingent liabilities, legacy issues at ECL and BCCL, and diversification into unrelated fields are key overhangs. Furthermore, potential wage escalation may keep earnings growth muted. That said, an undemanding valuation and attractive dividend yield are formidable anchors. Retain ‘BUY’ with a TP of INR165 (7.2x FY22E EPS).

FINANCIALS (INR mn)

Year to March FY20A FY21E FY22E FY23E

Revenue 9,60,803 8,58,634 9,20,232 10,21,944

EBITDA 2,19,209 1,43,395 1,78,838 1,85,597

Adjusted profit 1,67,142 1,07,066 1,35,483 1,33,043

Diluted EPS (INR) 27.1 17.4 22.0 21.6

EPS growth (%) 23.3 (35.9) 26.5 (1.8)

RoAE (%) 57.0 31.7 35.1 29.8

P/E (x) 4.7 7.3 5.8 5.9

EV/EBITDA (x) 2.6 3.8 2.6 2.1

Dividend yield (%) 9.5 9.5 9.5 9.5

PRICE PERFORMANCE

Larger subsidiaries remain key

We find that SECL, MCL and NCL continue to be key to CIL’s performance, accounting

for 66% of production and 76% of PBT. The company’s performance slipped in FY20,

mainly due to non-execution of key contracts at MCL and weather-related

disruptions at SECL. FY21 to date, MCL and NCL have fared better than other

subsidiaries. Besides, these two subsidiaries outclass peers on both profitability and

productivity. Hence, we expect MCL and NCL to provide a leg-up to CIL’s FY21

financial performance.

Evacuation infrastructure to complement production ramp-up

We are upbeat about CIL’s focus on developing evacuation infrastructure; it is

imperative to meet the FY24 production target of 1bn tonnes. While seven railway

lines are crucial, we would also emphasise the importance of 35 First Mile

Connectivity (FMC) projects—they would not only reduce reliance on road transport,

but also improve mechanisation and reduce the carbon footprint.

Execution of evacuation infrastructure projects is taking place mostly near MCL’s and

SECL’s large mines, wherein evacuation is a constraint. In our view, this

infrastructure will complement the 52 capacity enhancement projects currently

underway.

Explore:

Outlook and valuation: Attractive dividend play

In our view, evacuation infrastructure and production capacity enhancement

provide long-term comfort on CIL’s earnings growth. Furthermore, we do not believe

merchant mines would affect CIL’s market share materially. In the near term though,

contingent liabilities—particularly relating to income tax—and environmental issues

remain the key overhangs. We also do not view diversification into urea production

as prudent capital allocation, and remain circumspect of its benefits.

That said, there’s value beneath the surface: i) an undemanding valuation at 5.8x

FY22E EPS that implies deep discount to CIL’s own trading average and that of peers’;

and ii) a mouth-watering dividend yield: 12% at the CMP. The sustainability of yield

is least of concerns as CIL should continue to generate sufficient cash even after

meeting its capex needs. Maintain ‘BUY/SO’ with a TP of INR165 at 7.2x FY22E EPS.

-40

-15

10

35

60

Sales Growth(%)

EPS Growth(%)

RoE(%)

PE(x)

Metals & Mining COAL IN Equity

25,000

28,400

31,800

35,200

38,600

42,000

100

120

140

160

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Oct-19 Jan-20 Apr-20 Jul-20

COAL IN Equity Sensex

India Equity Research Metals & Mining October 1, 2020

COAL INDIA ANNUAL REPORT INSIGHTS

Amit Dixit Meera Midha +91 (22) 6620 3160 +91 (22) 4088 5804 [email protected] Meera.Midha@edelweissfin.

com

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COAL INDIA

Edelweiss Securities Limited

2 Edelweiss Research is also available on www.edelresearch.com, Bloomberg EDEL <GO>, Thomson FirstCall, Reuters and Factset

Financial Statements

Income Statement (INR mn) Year to March FY20A FY21E FY22E FY23E

Total operating income 9,60,803 8,58,634 9,20,232 10,21,944

Raw Material Cost 60,836 52,834 68,398 71,817

Employee costs 3,93,841 3,89,372 3,87,425 4,57,162

Other expenses 1,01,473 86,667 97,205 1,02,065

EBITDA 2,19,209 1,43,395 1,78,838 1,85,597

Depreciation 34,508 39,769 46,245 53,800

Less: Interest expense 5,029 4,092 4,092 4,092

Add: Other income 61,054 45,150 54,584 52,083

Profit before tax 2,40,713 1,44,684 1,83,086 1,79,788

Prov for tax 73,710 37,618 47,602 46,745

Less: Other adj 0 0 0 0

Reported profit 1,67,142 1,07,066 1,35,483 1,33,043

Less: Excp.item (net) 0 0 0 0

Adjusted profit 1,67,142 1,07,066 1,35,483 1,33,043

Diluted shares o/s 6,163 6,163 6,163 6,163

Adjusted diluted EPS 27.1 17.4 22.0 21.6

DPS (INR) 12.0 12.0 12.0 12.0

Tax rate (%) 30.6 26.0 26.0 26.0

Important Ratios (%) Year to March FY20A FY21E FY22E FY23E

EBITDA (INR/t) 472.1 341.9 391.8 388.2

Staff Costs (% of sales) 41.0 45.3 42.1 44.7

Output (t/worker) 2,192.0 2,145.9 2,416.9 2,671.3

EBITDA margin (%) 22.8 16.7 19.4 18.2

Net profit margin (%) 17.4 12.5 14.7 13.0

Revenue growth (% YoY) (3.5) (10.6) 7.2 11.1

EBITDA growth (% YoY) 3.8 (34.6) 24.7 3.8

Adj. profit growth (%) 23.3 (35.9) 26.5 (1.8)

Assumptions (%) Year to March FY20A FY21E FY22E FY23E

GDP (YoY %) 4.8 (6.0) 7.0 6.0

Repo rate (%) 4.4 3.5 3.5 4.0

USD/INR (average) 70.7 75.0 73.0 72.0

Production (mT) 602.2 560.0 599.2 629.2

Sales (mT) 581.8 546.9 585.1 614.4

FSA Volumes (mT) 501.0 452.4 500.0 521.9

e-Auction (mT) 65.4 82.6 70.1 74.4

FSA Realisation (INR/t) 1,538.0 1,472.9 1,504.3 1,590.4

e-Auction Premium (%) 41.6 14.1 23.2 23.2

Valuation Metrics Year to March FY20A FY21E FY22E FY23E

Diluted P/E (x) 4.7 7.3 5.8 5.9

Price/BV (x) 2.4 2.2 1.9 1.6

EV/EBITDA (x) 2.6 3.8 2.6 2.1

Dividend yield (%) 9.5 9.5 9.5 9.5

Source: Company and Edelweiss estimates

Balance Sheet (INR mn) Year to March FY20A FY21E FY22E FY23E

Share capital 61,627 61,627 61,627 61,627

Reserves 2,59,942 2,93,055 3,54,586 4,13,676

Shareholders funds 3,21,569 3,54,683 4,16,213 4,75,303

Minority interest 3,941 3,941 3,941 3,941

Borrowings 64,260 64,260 64,260 64,260

Trade payables 1,01,076 87,598 1,05,216 1,10,477

Other liabs & prov 3,06,125 3,06,125 3,06,125 3,06,125

Total liabilities 14,67,105 15,30,333 16,59,885 17,77,159

Net block 3,67,455 3,97,686 4,61,441 5,07,641

Intangible assets 953 953 953 953

Capital WIP 82,711 82,711 82,711 82,711

Total fixed assets 4,51,119 4,81,350 5,45,105 5,91,305

Non current inv 18,732 18,732 18,732 18,732

Cash/cash equivalent 2,85,465 3,16,534 3,92,835 4,75,215

Sundry debtors 1,44,082 1,46,767 1,38,665 1,25,993

Loans & advances 11,412 11,412 11,412 11,412

Other assets 4,00,548 3,99,790 3,97,388 3,98,755

Total assets 14,67,105 15,30,333 16,59,885 17,77,159

Free Cash Flow (INR mn) Year to March FY20A FY21E FY22E FY23E

Reported profit 1,67,142 1,07,066 1,35,483 1,33,043

Add: Depreciation 34,508 39,769 46,245 53,800

Interest (net of tax) 5,029 4,092 4,092 4,092

Others (2,40,799) 46,308 1,50,157 1,28,709

Less: Changes in WC 1,95,047 15,405 (28,122) (16,566)

Operating cash flow 41,465 1,75,022 2,60,253 2,56,333

Less: Capex 56,445 70,000 1,10,000 1,00,000

Free cash flow (14,980) 1,05,022 1,50,253 1,56,333

Key Ratios Year to March FY20A FY21E FY22E FY23E

RoE (%) 57.0 31.7 35.1 29.8

RoCE (%) 55.8 26.5 30.1 26.4

Inventory days 366 455 343 324

Receivable days 38 62 57 47

Payable days 586 652 514 548

Working cap (% sales) 12.0 15.3 11.2 8.5

Gross debt/equity (x) 0.2 0.2 0.2 0.1

Net debt/equity (x) (0.7) (0.7) (0.8) (0.9)

Interest coverage (x) 0 0 0 0

Valuation Drivers Year to March FY20A FY21E FY22E FY23E

EPS growth (%) 23.3 (35.9) 26.5 (1.8)

RoE (%) 57.0 31.7 35.1 29.8

EBITDA growth (%) 3.8 (34.6) 24.7 3.8

Payout ratio (%) 44.2 69.1 54.6 55.6


COAL INDIA

Edelweiss Research is also available on www.edelresearch.com, Bloomberg EDEL <GO>, Thomson FirstCall, Reuters and Factset 3

Coal India FY20 annual report: 13 key points Our analysis is based on the review of annual reports and financial statements of all the

eight subsidiaries except NECL.

In our view, CIL is focusing on achieving 1bn tonnes of production target by FY24 through

the right combination of enhancing production and building railway infrastructure.

Larger subsidiaries such as SECL, MCL and NCL are expected to play a pivotal role.

On the cash-accretion front, we believe the worst is over for the company and that there

might be a working capital release from receivables and inventory. This would keep

dividend yield sustainable even after considering capex needs.

However, on the other side, we see an increase in contingent liabilities because of

income tax and environmental clearances at MCL and SECL, respectively.

#1. Productivity and profitability: MCL and NCL ahead of the rest

Akin to FY19, all the subsidiaries were profitable in FY20. Larger subsidiaries NCL, MCL

and SECL outdo others on productivity. Productivity of smaller subsidiaries is lower than

average.

That said, on the profitability front, smaller subsidiaries such as ECL and BCCL turned in

a better performance than in FY19. However, SECL’s profitability declined the most due

to a lower premium for non-power coal volumes and a dip in sales volume. On the other

hand, MCL and NCL were steady in terms of both profitability and productivity.

Year to FY21E, volumes have grown well at both MCL and NCL. This should improve CIL’s

overall profitability.

FY20: NCL and MCL continue to excel on profitability and productivity

Source: Company, Edelweiss Research

ECLBCCL

CCL

NCL

WCL

SECLMCL

0

1,900

3,800

5,700

7,600

9,500

-50 110 270 430 590 750

(To

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age

per

per

son

)

(PBT/t)

COAL INDIA



FY19: Productivity and profitability matrix


#2. Working capital stretched in FY20 due to receivables

Despite generating INR284bn from operations (pre-working capital adjustments), cash

and balances decreased by INR2.6bn in FY20. Furthermore, debt rose by INR22.7bn. Cash

generation was severely impacted by a spurt in receivables, up 162% (by INR89bn) from

last year. The increase in receivables is attributable to delayed payments by state owned

discoms. Besides, current assets increased owing to advance payment of tax amounting

to INR47bn in Q4FY20.

Working capital stretched in FY20, receivables rise


We observe receivables increased across subsidiaries. In case of SECL, BCCL and WCL, the

increase was ~3x on average. State discoms were not able to clear their dues, particularly

in Q4FY20. We also note that the bulk of the increase in receivable pertains to the

unsecured category. This might make additional receivables more prone to risk. On the

other hand, the additional receivables are recent (<30 days). Hence, the risk of a write-

off is lower. In our view, the government’s recent initiatives might reduce the receivables

in H2FY21.

ECLBCCL

CCL

NCL

WCL

SECL

MCL

0

1,600

3,200

4,800

6,400

8,000

0 160 320 480 640 800

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COAL INDIA


Receivables by subsidiary

(INR mn) FY20 FY19

% growth Gross Net of Provisions Gross Net of Provisions

ECL 36,996 33,165 19,290 16,219 104.5

BCCL 31,544 24,147 13,938 6,137 293.5

CCL 27,755 24,921 13,182 10,951 127.6

NCL 18,556 18,502 9,602 9,545 93.8

WCL 13,769 13,499 3,876 3,602 274.8

SECL 20,396 16,538 6,806 3,877 326.6

MCL 13,754 13,231 5,360 4,652 184.4

NEC/CIL 192 80 151 3 NM

Total 1,62,961 1,44,082 72,203 54,986 162.0


Coal inventory too rose significantly: up from 54mt at end-FY19 to 74mt at end-FY20.

The inventory of stores and spares on the other hand was slightly lower. Almost 84%

of the coal inventory increase was at SECL and WCL. In case of SECL, while production

picked up in Q4FY20, the offtake stayed subdued. In case of WCL, refusal of

MAHAGENCO to take coal from cost-plus sources and less lifting of coal by MPPGCL

resulted in a subdued offtake. As a result, coal inventory at WCL stood at 14.3mt at

the end of FY20 compared with 9.2mt a year ago.

CIL inventory split

(INR mn) FY20 FY19 % growth

Stores & Spares 11,838 12,092 -2.1

Coal 52,005 41,382 25.7

Others 2,347 2,365 -0.8

CIL 66,189 55,839 18.5


Coal inventory by subsidiary

FY20 FY19 % growth

NCL 2,762 2,439 13.3

ECL 3,229 2,384 35.4

SECL 8,067 4,697 71.8

WCL 13,421 7,912 69.6

CCL 11,785 10,673 10.4

BCCL 6,305 7,098 -11.2

MCL 7,046 4,255 65.6

CIL 52,005 41,382 25.7


COAL INDIA



Stores and spares by subsidiary

FY20 FY19 % growth

NCL 3,917 4,288 -8.7

ECL 1,664 1,702 -2.3

SECL 2,817 2,929 -3.9

WCL 725 708 2.4

CCL 1,669 1,442 15.7

BCCL 631 581 8.7

MCL 698 589 18.6

CIL 11,838 12,092 -2.1


#3. SECL and MCL: Critical to meeting near-term targets

CIL has a production/offtake target of 710mt for FY21E. However, management,

during the Q1FY21 earnings conference call, clarified that the target has been

revised down to 660mt in the wake of covid-19. The revised target hinges mainly on

additional 25-30mt each from SECL and MCL.

We note that the FY21E target has been kept similar to FY20 with subsidiary-wise

allocation in accordance with their performance in FY20. For instance, the target for

NCL, the only subsidiary to have achieved its FY20 target, has been revised up to

113mt. In case of SECL and MCL, the largest subsidiaries that fell short of meeting

their targets by about 17% each, FY21 targets are broadly unchanged.

Overall offtake suffers mainly due to underperformance of SECL and MCL

Company FY21 % YoY

growth

FY20 % YoY

growth

FY19

AAP Target AAP Target Achieved % Achieved AAP Target Achieved % Achieved

ECL 52 5.4 54 49 92.2 -2.2 47 50 107.8

BCCL 29 0.8 36 29 79.9 -13.0 38 33 87.0

CCL 74 9.9 77 67 87.4 -1.6 69 68 99.6

NCL 113 5.2 106 107 101.1 5.8 95 102 106.9

WCL 60 14.1 56 53 93.9 -5.4 50 56 111.8

SECL 172 21.2 171 142 83.2 -9.0 160 156 97.8

MCL 160 19.4 160 134 83.8 -5.8 152 142 93.9

NEC 1 1 74.9 -25.5 1 1 89.8

CIL 660 13.4 660 582 88.2 -4.3 610 608 99.7


SECL underperformed on account of: i) delay in positioning of equipment in Q1FY20,

which hurt productivity; ii) flooding in the Dipka mine (35mtpa); and iii) contract

management issues. In H2FY20, however, coal production/OB removal gained

momentum and contained the production dip. In fact, the company achieved peak

coal production on 27 March by crossing 1mt in a single day. Furthermore, the

efforts to start new mines and evacuation infrastructure yielded result as two open-

cast mines at Bijari (2mtpa) and Jagannathpur (3mtpa) were operationalised.

In case of MCL, coal production was just 87.7% of the AAP target while Overburden

removal was 77.8% of the AAP target. The major reasons for the shortfall were: i)

land constraints at various mines: Bhubaneswari, Lakhanpur, Jagannath, Hingula,

Belpahar, Kulda, etc; ii) delay in award of OBR contracts at the Bharatpur, Jagannath

and Lajkura mines; and iii) sporadic bandhs in Q2FY20 and flash rains and

thunderstorms.


COAL INDIA


We understand that land constraint issues were resolved in H2FY20. MCL delivered

record coal despatch (52.14mt) and OBR removal (62.7m3) in the last four months

of FY20. So far in FY21, MCL has outperformed other subsidiaries, recording

production growth of 6% compared with a dip of 7% for CIL as a whole.

NCL was the only subsidiary to meet its production target; however, it could not

achieve the overburden removal target of 362m3 owing to the failure of OBR

subcontractors to achieve the desired level of excavation at the Amlohri, Bina and

Dudhichua projects.

OBR ratio remained stable in FY20

Company FY20 FY19 OBR ratio (m3/t)

Production (mt) OB (m3) Production OB (m3) FY20 FY19

ECL 50 140 50 126 2.8 2.5

BCCL 28 83 31 103 3.0 3.3

CCL 67 103 69 100 1.5 1.5

NCL 108 323 102 318 3.0 3.1

WCL 58 211 53 192 3.7 3.6

SECL 151 165 157 183 1.1 1.2

MCL 140 125 144 130 0.9 0.9

NEC 1 5 1 9 9.1 10.8

CIL 602 1,154 607 1,162 1.9 1.9


By sector, low despatches to the power sector is the single most important factor for the

shortfall. Despatch to the power sector was just 88% of target and 5% lower than FY19

owing to the slowdown in industrial activity in Q2FY20, high stocks at power plants and

lockdown in the last fortnight of March-20.

Power sector: Key reason for the miss in despatches

Year FY20 YoY

growth

FY19 FY18 YoY Growth

Sector AAP Target Diepatch (%) AAP Target Diepatch (%) Actual Absolute (%)

Power (Utilities)* 530.0 465.7 87.9 (5.3) 489.0 491.5 100.5 454.2 37.3 8.2

Steel** 4.1 2.2 54.2 7.7 3.7 2.1 56.1 3.1 (1.1) (33.9)

Cement 5.0 5.7 113.3 23.0 6.3 4.6 74.1 4.8 (0.2) (4.0)

Fertilizer 2.7 1.8 66.0 (1.5) 2.6 1.8 68.1 1.9 (0.1) (4.9)

Others 125.9 107.1 85.0 (1.1) 106.8 108.3 101.4 117.4 (9.1) (7.8)

Despatch 667.8 582.5 87.2 (4.2) 608.4 608.3 100.0 581.5 26.8 4.6


Note: * Power house despatches in 2018–19 and 2017–18 include despatches under special forward e-auction to power.

** Despatch of washed coking coal and raw coking coal for direct feed, blendable coal to steel plants and to external washeries.

#4. FY20 revenue dip: Power volume/e-auction premium

The decline in CIL’s FY20 revenue can be attributed to lower volumes to the power sector

as well as a reduction in the premium obtained from the non-power sector. Volume to

the power sector dipped 5% to 466mt. Similarly, non-power realisation dropped 10%.

However, this was partially offset by higher realisation from Power customers owing to

higher supply through linkages and improvement in grades.

COAL INDIA



FY20 revenue dip: Largely attributable to lower power volume/e-auction premium


All the subsidiaries (except WCL) reported a sharp decline in realisation premium of

non-power over power customers. It was the steepest in case of ECL and BCCL.

However, for both, the dip in premium was accentuated by the uptick in power

realisation and a simultaneous decline in non-power realisation. Surprisingly, SECL

was the only subsidiary whose power realisation was lower than last year’s.

FY20: Volume and realisation by subsidiary

FY20 Revenue (INR mn) Volume (mt) Realisation (INR/t)

% premium Power Non-Power Power Non-Power Power Non-Power

ECL 1,10,089 18,149 45 4 2,428 4,558 87.7

BCCL 69,842 19,834 24 5 2,956 3,866 30.8

CCL 82,107 34,320 53 15 1,545 2,290 48.2

NCL 1,31,257 24,309 93 15 1,415 1,655 16.9

WCL 61,722 29,670 43 10 1,435 3,097 115.8

SECL 1,07,696 60,693 115 27 939 2,227 137.2

MCL 87,915 53,705 93 41 949 1,299 37.0

CIL 6,50,627 2,40,679 465 117 1,399 2,058 47.1


FY19: Volume and realisation by subsidiary

FY19 Revenue (INR mn) Volume (mt) Realisation (INR/t)

% premium Power Non-Power Power Non-Power Power Non-Power

ECL 1,06,527 22,617 47 4 2,272 6,423 182.7

BCCL 67,648 26,129 27 6 2,483 4,482 80.5

CCL 75,392 37,348 52 16 1,439 2,291 59.2

NCL 1,27,157 21,899 89 13 1,430 1,728 20.8

WCL 60,818 29,405 45 10 1,349 2,809 108.2

SECL 1,28,429 68,812 128 28 1,002 2,467 146.2

MCL 91,853 61,395 103 40 896 1,543 72.3

CIL 6,57,825 2,67,604 491 116 1,339 2,298 71.6


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COAL INDIA


#5. Larger subsidaries: Critical to achieving 1bn-tonne production

In FY20, only two new projects went on stream. However, the contribution from

these new projects was impacted by late commencement of the Jagannathpur OCP

and Bijari OCP due to the delay in obtaining clearances. Against a sanctioned

capacity of 3mtpa, Jagannathpur OCP delivered just 0.1mt.

New projects started in FY20

Subsidiary Name of Projects Type Sanctioned Capacity (mtpa) Sanctioned Capital (INR mn) Production in FY20 (mt)

SECL Jagannathpur OC OC 3.0 4,595 0.1

SECL Bijari OCP OC 1.5 1,645 1.7

Total 4.5 6,240 1.7


In FY20, CIL/subsidiaries board sanctioned projects aggregating 132mtpa in capacity

entailing capex of INR212bn. We expect these projects to be spread over several

years; however, they are key to execution CIL’s 1bn tonne production target by FY24.

New projects approved in FY20

S. No. Name of Project Subsidiary Date of Approval Sanctioned Capacity

(mtpa)

Sanctioned Capital (INR

mn)

A. Sanctioned by CIL in FY20

1 Parasea Belbaid Re-Org. UG ECL 22-Jul-19 2.1 8,264

2 Block-B Expn. OCP NCL 22-Jul-19 8.0 9,987

3 Rampur Batura OCP SECL 22-Jul-19 4.0 12,082

4 RPR of Bjattadih Expn. OCP WCL 11-Feb-20 2.0 5,806

5 Dinesh (MKD-III) Expn. OCP WCL 11-Feb-20 8.0 8,229

6 Kotre Basantpur Pachmo OCP CCL 11-Feb-20 5.0 8,611

7 Recast EPR Amrapali OCP CCL 11-Feb-20 25.0 49,836

8 RPR Magadh Expn. OCP CCL 11-Feb-20 51.0 69,643

9 RCE Khadla Expn. OCP NCL 11-Feb-20 10.0 7,933

Sub Total (A) 115.1 1,80,391

B. Sanctioned by Subsidiary in FY20

1 Parej East RPR OCP CCL 04-Nov-19 0.5 2,601

2 Pichri OCP CCL 03-Aug-19 1.2 3,496

3 Tetariakhar RCE OCP CCL 04-Nov-19 2.5 2,435

4 Simaria OC NCL 25-May-19 2.0 3,966

5 Gandhigram UG WCL 31-Aug-19 1.3 4,142

6 Hendegir OC CCL 03-Mar-20 4.0 4,356

7 RPR of Jarangdih PC CCL 03-Mar-20 1.5 4,144

8 Dhankasa UG WCL 03-Feb-20 1.0 2,893

9 Expn. Of New Majri UG to OC WCL 25-May-19 3.0 4,023

Sub Total (B) 17.0 32,055

Total (A + B) 132.0 2,12,446


According to the revised road map for 1bn tonnes per year of coal production by FY24,

SECL is expected to account for almost 25% (254mt). The major share of production is

likely to accrue from Gevra OC (70mtpa), Kusumunda OC (50mtpa), Dipka (40mtpa),

Manikpur OC (3.5mtpa), Saraipali OC RCE (1.4mtpa) in the Korba coalfields. In the Mand

Raigarh coalfields, Baroud OC (3mtpa), Jampali OC RCE (2mtpa), Chhal OC (6mtpa) and

Bijari OC (1.5mtpa).

COAL INDIA



There are 37 completed projects in MCL with rated capacity of 73.78mt (including

capacity of exhausted mines), out of which two with rated capacity of 1.6mt have been

exhausted. As many as 16 projects were under implementation (at end-March-20) with

rated capacity of 156.83mt. Production from these projects stood at 87.7mt in FY20.

For FY21, three MDOs are planned with total capacity of 85mtpa: Siarmal–50mtpa;

Subhadra– 25mtpa; and Balbhadra–10mtpa. Three expansion projects of 85mtpa are

also lined up, namely, Bhubneswari (40mtpa), Kaniha (30mtpa) and Balram (15mtpa).

The completion of the 52km line from Jharsuguda to Sardega will augment coal

transportation from the Basundhara area.

Similarly, in the Talcher coalfield, the Kalinga-Angul link railway line is being laid.

Completion of this stretch would enable a unidirectional movement of empty rail rakes

from the Angul side while loaded rakes will be evacuated from the Talcher side. This will

double the Talcher coalfield’s rake movement capacity.

In case of NCL, three expansion projects are going on: Jayant from 10mtpa to 20mtpa,

Dudhichua from 10mtpa to 20mtpa and Block B from 3.5mtpa to 8mtpa. Besides, the

NCL board approved one greenfield open-cast mining project, viz., Semaria OCP (2mtpa)

in May-2019. Three new/expansion open-cast projects too have been identified for

planning during FY21: Jhingurdah Bottom OCP (2mpta), Khadia Expansion from 10mtpa

to 15mtpa and Nigahi expansion OCP from 15mtpa to 25mtpa.

Two of the biggest projects (cumulative: 76mt) in FY20 have been approved for CCL. Its

target for FY24 has been pegged at 145mt, implying a CAGR of 21% (FY20-24E), the

highest among subsidiaries. NCL is the other subsidiary in focus with three projects

totalling 20mtpa.

#6. Evacuation infrastructure: Focus on railways

Coal evacuation is critical for increasing CIL’s production from 608mt in FY20 to 1bn

tonnes in FY24. A major increase in production is expected to come from SECL (Korba

Coalfields, Mand-Raigarh Coalfields), MCL (IB Valley, Talcher) and CCL (North Karanpura).

As of now, close to 67% of the total coal transportation takes place through green

channels- ex-road. In case of ECL and NCL, wherein rail transportation is quite developed,

the bulk of transportation of coal takes place by the rail or merry go round (MGR) route.

However, WCL, SECL and MCL still lag behind, which pulls CIL’s overall average down.

The bulk of production growth through FY24 is expected to come from these subsidiaries;

hence it is imperative to augment their railway evacuation infrastructure.

FY20: Modes of coal transportation

(In mt) Rail Road MGR Belt pipe conveyor Others Total Green transport

ECL 33 3 14 0 0 49 95%

CCL 36 23 0 0 9 67 53%

NCL 32 21 51 3 107 80%

WCL 33 17 0 2 53 63%

SECL 50 60 24 6 2 142 57%

MCL 77 43 12 2 134 67%



COAL INDIA


FY19: Modes of coal transportation

(In mt) Rail Road MGR Belt pipe conveyor Others Total Green transport

ECL 34 2 14 0 0 50 95%

CCL 31 29 0 0 9 68 45%

NCL 30 21 47 4 102 80%

WCL 35 18 0 2 55 64%

SECL 49 71 27 7 2 156 53%

MCL 87 43 11 2 143 69%


CIL has identified seven critical railway projects for evacuation of coal, out of which three

are funded by CIL on a deposit basis and the remaining four are funded via JVs/SPVs. The

status of these projects follows.

1. Tori-Shivpur New BG single line (43.7km): Commissioned

The single rail line from Tori up to Balumath (19.3km length) was inaugurated for

coal traffic movement in March 2018. Subsequently, coal movement also started

from Bukru and Phulbasia sidings on this rail line. Civil works related to a single rail

line from Tori up to Shivpur have been completed and doubling of rail line from Tori

to Shivpur is over along with overhead electrification works.

Other ancillary works are in progress by Eastern Central Railway. The Biratoli-

Mahuamilan surface rail line has been done and work on the Tori-Biratoli rail line

connectivity is in progress. Railways has incurred a total of INR22.7bn on the Tori-

Shivpur new BG rail line network, including connectivity work of Tori-Biratoli and

Biratoli-Mahuamilan rail lines.

Tori-Shivpur line


COAL INDIA



2. Doubling of Jharsuguda-Barapali-Sardega rail line

This project consists of doubling of the Jharsuguda-Sardega rail line of 52.4km,

double-leg rail flyover at Jharsugda and Barpali loop with seven concentric rail

lines and seven RLS in these lines of total capacity 70mtpa. The estimated cost

of the entire project is INR29bn.

Jharsuguda-Barapali-Sardega line


3. East Rail Corridor in state of Chhattisgarh

During FY20, the first 45km from Kharsia to Korichhapar (single line) of Phase-I

has become operational for Goods Traffic in October-2019. Signaling & telecom

work in this section is in advanced stage of completion. SCRL has started

receiving its share of revenue from SECR as per the provisions of concession

agreement with them.

As on 31 March 2020, the total expenditure on the project (Phase-1) is

INR21.8bn, out of the total project cost of INR30.6bn. The remaining part of the

mainline between Korichhapar to Dharamjaigarh and the first block section of

the spur line from Gharghora to Bhalumuda is also at an advanced stage of

completion. The execution of second block section from Bhalumuda to Donga-

Mahua has been put on hold, pending decision of alignment from the

Government of Chhattisgarh.

The Detailed Project Report (DPR) for Phase-II of the Project from

Dharamjaigarh to Korba for about 61.53km plus 9.073km flyover at the Urga

single line, plus 6km for a Y connection that is 135.30km long has been approved

by the CERL, SECL and CIL boards at a total project cost of INR16.8bn


COAL INDIA


4. East West Rail Corridor in state of Chhattisgarh

Chhattisgarh East West Rail Ltd (CEWRL), a JV between SECL, IRCON and CSIDCL

was incorporated in March-2013, with a shareholding of 64%, 26% and 10%,

respectively, for developing the East-West Rail Corridor (Gevra Road-Pendra

Road new line project of 135.3km) under the PPP policy of Railways. The

estimated cost of the project is INR49.7bn and it is expected to be completed

by March-23. East-West Rail corridor has been accorded the status of a “Special

Railway Project” by the Ministry of Railways. This rail corridor will facilitate coal

transport from Gevra coalfields of SECL as well as to cater to passenger services.

This corridor will take care of enhanced coal production at the Korba Coalfields

from 100mt at present to 150mt over the next four years. Korba Coalfields has

the biggest mine of Asia, viz., Gevra. Coal production at Gevra is expected to go

up from the current level of 41mt to 70mt. Coal production from Kusmunda will

also increase from 40mt to 50mt. Currently, coal traffic from the Korba area is

going from Korba and merging at the Champa station in Main Line of Howrah-

Mumbai trunk route of SECR. Champa to Bilaspur sector is quite congested with

more than 100 trains running each way. An alternative route from Korba to

Pendra is planned to avoid congested section of SECR for taking coal from Korba

to North-West India. Also, the distance will reduce by 54km.

Land acquisition and forest clearances have been completed for the main line.

Promotors have infused equity to the tune of INR5.04bn.

Rail corridors by CEWRL and CERL


5. Angul-Balram rail link

MCL has partnered with Indian Railways and the Government of Odisha to form

a JV, i.e. MCRL. MCRL has taken up the work of the Angul-Balram rail link in

Phase-1 as part of Inner Corridor (14.22km). The projects identified for taking

up through MCRL are:

COAL INDIA



Phase-1 (a): Angul-Balram Link (Length 13km)

Phase- 1 (b): Balram-Jarapada connectivity including Putugadia-Tentuloi

Link- 55km

Phase –II: Jarapada-Budhapank via. Tentuloi (Outer Corridor)- 136km

6. Shivpur Kathautia Railway line

This is a 47.7km long railway line being proposed under the JV model in North

Karanpura Coalfield of ECL. Land acquisition is in progess.

Shivpur-Kathautia Line


7. Rail connectivity of Lingaraj SILO with Deulbeda siding

Construction of the new coal corridor at the Talcher coalfield of 41.98km is in

the final stage. Of the six parts, only the Lingaraj part (Phase I and II- 6.21km) is

pending. The Lingaraj section is also 72% complete with rail connectivity of

Lingaraj Silo with Deulbeda siding is pending. The new coal corridor is expected

to be commissioned in March-21. The cost has been revised up from INR1.7bn

to INR2.4bn.


COAL INDIA


First-mile connectivity (FMC)

FMC is the system of coal transportation aimed to replace the existing road transport of

coal from pitheads to despatch points with seamless mechanised transportation systems

such as conveyor belts to decrease the transportation time and dust pollution. It will have

multiple added advantages such as easing the load on road network, saving in diesel cost

and reduction of the loading cycle time of rakes/idling of rakes.

CIL has identified 35 FMC projects in mines having capacity 4mtpa and above. All the

subsidiaries have in-principle approved their respective projects in their respective

Boards. Out of 35 projects, tenders have been floated for 12 projects. The rest 23 projects

are under different stages of formulation. Out of 12 floated tenders, work has been

awarded in respect of 8 projects (SECL), which are under construction for 117mtpa

capacity.

SECL has announced eight projects under the first phase of the initiative at an estimated

cost of INR31.5bn. SECL will set up coal handling points (HP) with Silo having rapid loading

systems, which will have benefits like crushing, sizing of coal, quicker and better quality

coal loading, not to mention the advantage of precise pre-weighted quantity of coal

being loaded.

Construction of Phase-I of CHP consisting of 2x4x100t truck receiving hoppers and 20kt

capacity overhead RCC bunker at Kusmunda OC was completed and commissioned in

February-20. Evacuation of coal is in operation through Belts 1 and 2 of Chhattisgarh

State Power Generation Company Limited (CSPGCL). Construction of Phase II CHP

consisting of 4 nos. silo with rapid loading system and Kusmunda OC is in progress.

SECL: First-mile connectivity projects

FMC projects (INR mn)

Kusmunda Phase II CHP Silo (40mtpa) 2,628

Kusmunda Phase II 5,000

Manikpur CHP Silo (5mtpa) 1,568

Gevra RLS (20mtpa) 2,024

Gevra Silo No. 5 & 6 (30mtpa) 7,025

Dipka Mechanised siding 2,865

Chhal OC 3,282

Baroud CHP with Silo 7,090

Total 31,481


#7. Contingent liabilities rise, particularly relating to income tax

FY20 marks the biggest jump in contingent liabilities related to income tax (central

government) and environmental clearances (state government). The increase in

contingent liabilities related to income tax have risen primarily at MCL while the increase

in contingent liabilities related to mining beyond environmental clearance limits have

risen at SECL.

Curiously, the contingent liability pertaining to SECL on environmental grounds has been

shown only in consolidated accounts of Coal India and not disclosed in the subsidiary

account.

COAL INDIA



Contingent liabilities

(In INR mn) FY20 FY19

Central Government

Income Tax 2,46,979 1,83,479

Central Excise 47,630 46,105

Clean Energy Cess 3,214 3,214

Central Sales Tax 12,454 11,870

Service Tax 7,778 9,277

Others 7 5

Sub-total 3,18,061 2,53,950

State Government and Local Authorities

Royalty 29,558 25,226

Environmental Clearance 4,67,579 4,47,146

Sales Tax/VAT 29,599 28,692

Entry Tax 6,005 5,191

Electricity Duty 1,215 1,005

MADA 3,906 3,439

Others 19,681 19,533

Sub-total 5,57,542 5,30,232

Central Public Sector Enterprises

Suit against the company under litigation 108 431

Others 490 490

Sub-total 598 921

Others

Miscellaneous - Land & Others 29,881 30,046

Employee Related 9,164 10,379

Sub-total 39,045 40,424

Grand total 9,15,246 8,25,527


Income tax liability by subsidiary

Income tax (INR mn) FY20 FY19

ECL 13,206 10,486

BCCL 8,811 7,996

CCL 8,090 6,001

WCL 807 523

SECL 1,15,502 1,05,958

MCL 62,501 22,076

CIL 2,46,979 1,83,479


In FY20, MCL’s management filed revision applications against the claim of INR112bn as

compensation for production of coal beyond the environmental clearance limit from the

Office of Deputy Director Mines. As a result, the Revision Authority, Ministry of Coal set

aside the claim for INR83bn. Hence, the contingent liability has been reduced by an

equivalent amount.


COAL INDIA


In case of SECL, penalty of INR102bn in respect of 16 mines for illegal mining has been

imposed as per the order of Supreme Court by the state government. This penalty has

been considered in the consolidated accounts as contingent liability as appeals by the

company before the competent authority are under process. In subsidiary accounts, SECL

has not recognised this as a contingent liability.

Liabilities relating to Environmental Clearance by subsidiary

Environmental clearance (INR mn) FY20 FY19

ECL 21,781 21,781

BCCL 1,73,445 1,73,445

CCL 1,35,685 1,33,894

WCL - -

SECL 1,01,292 -

MCL 29,150 1,11,618

CIL 4,67,579 4,47,146


#8. Technology adoption and absorption: Larger subsidairies in focus

CIL is taking a number of technological initiatives in various fields across its operational

activities. The company is focusing on introducing mass production technology in both

underground and opencast mines, introduction of high-wall and long-wall mining

technology, man-riding system in underground mines and enhancing its IT infrastructure.

Most optimum sizes of HEMMs are being provisioned for opencast projects. Key points:

1. In underground mining, Continuous Miner (15nos.) has been introduced at 12

mines of CIL so far. Furthermore, long-wall mining has begun in Moonidih UG of

BCCL and Jhanjra UG of ECL.

2. Free Steered Vehicles for transportation of men and materials in underground

mines have been introduced in the Jhanjra UG mine of ECL.

3. Surface miners have been introduced in several opencast mines to eliminate

drilling and blasting, and facilitating selective mining.

4. 47 man-riding systems have been commissioned at 42 mines to reduce arduous

walking of miners.

5. Geovia Minex software has been introduced for efficient planning of open-cast

mines.

6. GPS/GPRS-based Vehicle Tracking System in coal transporting vehicle to prevent

theft and pilferage.

7. RFID, CCTV and Boom barrier based Weight monitoring has been introduced to

reduce theft of coal during transfer.

8. Numerical modelling software for scientific studies involving strata control.

MCL has progressively enhanced coal production through the Surface Miner technology.

Of the 139.52mt of coal mined by the open-cast method, almost 92.52% (129.09mt) was

mined through surface miner.

CCL has been lagging as far as the technology adoption is concerned. However, the

company started operations at the Churi Underground project with continuous miner

technology on 24 March, 2019. This is CCL’s first major underground project using

continuous miner technology. Besides, the company is conducting a geological study for

extraction of 6.8mt of coal by surface miner at Tetariakhar OCP of the Rajhara area.

COAL INDIA



SECL has been at the forefront of modernisation and technology absorption. Besides, the

initiatives in underground mines discussed elsewhere in the report, the company has

adopted surface miners on a hiring basis for coal production at Gevra OC Expansion,

Dipka OC expansion, Kusmunda OC expansion, Chhai OC, Baroud OC and Mahaan II OC.

The total coal production from Surface Miners in FY20 was 95.71mt (FY19: 102.7mt).

Besides, the company has adopted high-wall mining technology at the Sharda mine

(FY20: 5.7mt). Another new project at Batura is under implementation. High-wall mining

enables extension of mine life by extracting material from thin seams or underlying coal

seams in the high wall of an opencast mine that has reached the final position due to an

uneconomic stripping ratio or surface constraints.

NCL was the largest volume handling company of CIL in FY20 (coal production: 108.05mt;

overburden removal: 323.23m3). There are ten mechanised open-cast mines being

worked by large size HEMMs. NCL deploys the largest fleet of Draglines, Surface Miner

and some of the largest size shovel-dumper combinations. Total stations and 3D laser

scanners are used for survey along with the SURPAC software. Training to dumper

operators is imparted on training simulators. Coal is despatched through a rapid wagon

loading system in SILO of the coal handling plants.

ECL has taken initiatives for technological upgradation and modernisation of existing

underground mines, however, the progress in case of open-cast mines has been

constrained. There are land constraints in introduction of mass production technology in

large scale owing to water logging on upper horizon and expansion of open-cast

operations. The company intends to introduce high-wall mining technology at Nimcha

and Sripur Colliery.

#9. Focus on enhancing efficiency of underground operations

CIL produces just 5% of its volume from underground mines. The bulk of the underground

production happens at SECL and ECL. NCL, on the other hand, does not have any

underground mine. This is one of the reasons that make NCL one of the most profitable

subsidiary. Open-cast mining leads to mechanised bulk production at competitive rates.

Furthermore, the gentle gradient of coal seams enables deployment of Draglines, which

are cost effective in operations.

In case of ECL, underground mining is necessitated by huge infrastructure built on coal-

bearing areas that hinder open-cast mining. Additionally, dense population in the area

impedes land acquisition. Despite having a wide range of coal grades, ECL’s profitability

is impacted by its legacy of small mines.

Mix of underground and opencast mines by subsidiary

Company Underground Opencast Total

FY20 FY19 FY18 FY20 FY19 FY18 FY20 FY19 FY18

ECL 9.2 9.1 8.6 41.2 41.1 35.0 50.4 50.2 43.6

BCCL 1.0 0.9 1.1 26.7 30.1 31.5 27.7 31.0 32.6

CCL 0.7 0.3 0.4 66.2 68.4 63.0 66.9 68.7 63.4

NCL - - - 108.1 101.5 93.0 108.1 101.5 93.0

WCL 4.2 4.6 5.0 53.5 48.6 41.3 57.6 53.2 46.2

SECL 14.1 14.8 14.5 136.5 142.6 130.3 150.5 157.4 144.7

MCL 0.8 0.9 1.0 139.5 143.3 142.0 140.4 144.2 143.1

NEC - - - 0.5 0.8 0.8 0.5 0.8 0.8

CIL 30.0 30.5 30.5 572.1 576.4 536.8 602.1 606.9 567.4



COAL INDIA


SECL has introduced Continuous miner (CM) at several underground mines such as Kurja-

Sheetaldhara mine, Kapildhara mine, Pinoura UG mine, etc. Low capacity continuous

miner at the Rani Atari mine is also in operation. The total production from continuous

miner in FY20 was 0.36mt (2.5% of total underground production). Besides, the company

has taken steps for introduction of Continuous Miner at other Underground mines such

as Ketki UG, Gayatri UG, Rehar UG, Shivani UG and Rajgamar UG in the future.

ECL has also deployed LHD/SDL in 57 of its mines until FY20. As on 31 March, 2020, the

number of SDLs, LHDs and UDMs are 244, 40 and 134, respectively. Mass production

technology using Continuous miner combined with Shuttle Car (6 sets) have been

deployed at Jhanjra, Sarpi and Kumardih-B UG projects. Furthermore, eight mines of ECL

have been identified for introduction of Continuous Miner technology, which are under

process.

In WCL, work for introduction of Continuous Miner on hiring basis at Tawa II UG has been

awarded and is likely to be introduced in FY21. Besides, the proposal for introduction of

Continuous Miner in Chhatarpur UG mine is in pipeline.

Man Riding

In order to eliminate long arduous travel, fatigue and improve productivity of workers in

underground mines, various subsidiaries have installed Man Riding Systems (MRSs):

1. WCL: 17 MRSs have been installed in 16 underground mines. Two MRSs were

installed in FY20 in Chattarpur-I and Tawa-II UG. Installation of one more MRS

at the Murpar underground mine is expected to commence shortly.

2. ECL: Ten MRS have been installed so far. In the Bansra underground mine, one

MRS was installed in FY20.

3. SECL: 17 MRSs have been installed in 14 underground mines. Besides,

procurement of MRS at Dhelwadih underground mine and Katkona

underground mines 1 and 2 (second set) is in tendering approval stage while at

the Kariaha underground mine is under process of approval.

#10. FY20 capex: Merely 63% of target; likely to change

CIL missed its capex target both in FY19 and FY20. In FY20, merely 63% of the budgeted

capex was incurred. NCL disappointed the most with a 63% shortfall in capex compared

with the budget and a 57% decline over last year.

We understand from NCL’s annual report that capex was incurred primarily in heavy

earth moving machinery (HEMM) procurement and land acquisition. No other details are

provided. So, we believe the shortfall might have been due to the postponement of

certain purchases to FY21E. The HEMM procurement plan for FY21 suggests capex might

go up this year.

In case of WCL, the spend was lower owing to non-materialisation of capital expenditure

earmarked for the new coal block and the effect of covid-19 towards the final payment

of HEMM, civil works, etc. In SECL, the delay in new projects, primarily due to land

acquisition issues resulted in the capex shortfall.

COAL INDIA



Capex: Budgeted versus Actual over the years

(INR mn) FY20

% shortfall % growth

(YoY)

FY19 FY18

Budgeted Actual Budgeted Actual Budgeted Actual

ECL 11,000 8,967 -18.5 7.7 10,900 8,325 10,500 9,600

BCCL 6,250 5,490 -12.2 34.3 7,300 4,087 6,500 9,289

CCL 8,500 6,357 -25.2 -17.1 11,000 7,667 6,500 17,023

NCL 12,350 4,589 -62.8 -57.3 11,500 10,751 10,000 6,643

WCL 10,500 5,555 -47.1 -31.3 11,500 8,087 10,500 12,370

SECL 21,000 14,966 -28.7 -4.4 20,500 15,655 19,500 19,652

MCL 17,000 15,873 -6.6 12.2 16,000 14,146 13,000 13,679

CMPDIL 550 320 -41.9 63.4 400 196 400 417

Others 12,850 580 -95.5 -86.2 5,900 4,201 8,100 4,673

CIL 1,00,000 62,697 -37.3 -14.2 95,000 73,115 85,000 93,346


#11. Dragline procurement in FY21 suggests focus on OB removal

There is a decrease of 219 equipment of Shovel-Dumper system after the survey of old

equipment in FY20. Purchase orders for high capacity HEMM of INR59bn, viz., nine

shovels, 179 dumpers and 44 dozers was placed in FY20.

In FY21, CIL plans to procure HEMM worth INR70bn, viz., six draglines, 27 shovels, 19

dumpers and 11 dozers for enhanced coal production in coming years.

In our view, procurement of draglines suggests that CIL is focusing on higher overburden

removal. Among subsidiaries, we believe procurement is expected to be higher at MCL,

WCL and CCL as these subsidiaries are critical for CIL’s future growth and suffered the

maximum decline in equipment compared with FY19.

Equipment availability and utilisation

Equipment

No. of Equipment Indicated as % of CMPDI Norm

As on 1-4-2020 As on 1-4-

2019

As on 1-4-

2018

Availability Utilisation

FY20 FY19 FY18 FY20 FY19 FY18

Dragline 33 32 35 93 92 93 87 87 80

Shovel 661 680 695 95 94 93 68 70 71

Dumper 2,678 2,878 2,781 112 112 111 69 68 69

Dozer 967 955 969 103 100 99 52 52 51

Drill 652 663 675 107 106 106 49 55 53


#12. KMP remuneration: Down 16% in FY20

In FY20, key management personnel (KMP) remuneration slid 16% compared with the

declines of 9.49% in median and 9.01% in average remuneration of all employees. This

was against the revenue decline of 4%. However, the decline in remuneration was mainly

due to implementation of the recommendation of 3rd PRC in case of Executives and

payment of arrears for the same in FY19 and payment of NCWA-X arrear to Non-

Executives in the prior year. Besides, the reduction in workforce by 5% owing to natural

attrition contributed to the decline.


COAL INDIA


KMP remuneration

Name Designation Total (INR mn) Ratio to Median Remuneration Increase in Remuneration (%)

Pramod Agrawal* CMD 0.32 0.28 -

AK Jha** ex-CMD 7.42 6.56 1.39

SN Prasad*** ex-DIR (M) 6.26 5.53 1.09

Binay Dayal DIR (T) 6.08 5.37 1.16

R.P. Srivastava DIR (P) 5.16 4.56 1.27

Sanjiv Soni# DIR (F) 4.18 3.70 -

SN Tiwari## DIR (M) 2.29 2.03 -

Sidhartha Sarkar### CFO 1.29 1.14 -

M. Vishwanathan CS 5.17 4.57 1.08

Total 38.17


Note: *Mr. Pramod Agrawal, CMD, started drawing remuneration from CIL HQ w.e.f. 1.02.2020.

** Mr. A. K. Jha, ex-CMD, superannuated from CIL HQ w.e.f. 31.01.2020.

*** Mr. S N Prasad, ex-D(M) superannuated from CIL HQ w.e.f. 30.11.2019.

# Mr. Sanjiv Soni, D (F) started drawing remuneration from CIL HQ w.e.f. 01.07.2019.

## Mr. S N Tiwari, D(M) started drawing remuneration from CIL HQ w.e.f.01.12.2019.

### Mr. Sidhartha Sarkar, GM(F/IC), relinquished the post of CFO, CIL w.e.f.10.07.2019, so data only up to 30.06.2019 provided.

#13. Progress on other projects

Coal-based ammonia-urea complex at Talcher

Talcher Fertilisers Limited (TFL), a JV of CIL with RCF, GAIL and FCIL, has been entrusted

with setting up a 1.27mtpa Surface Coal Gasification based integrated fertilizer plant on

a partial Lump Sum Turnkey (LSTK) basis on the premises of FCIL’s closed fertilizer plant

at Talcher (Odisha).

Of the estimated project cost of INR133bn (D/E of 72:28), work orders worth over

INR78bn have been awarded in September-19. The TFL board and the board of promotor

companies approved coal gasification technology of M/s Air Products. All pre-project

works such as commissioning of Construction Water System, Construction of Power Line,

Land Development, etc are in full swing. LSTK contractor M/s Wuhaun Engineering has

commenced the site preparation through a local contractor.

In our view, this project might suffer delays owing to the outbreak of covid-19 and the

recent tensions in the Indo-China relations.

Setting up of natural gas-based ammonia-urea complex at Gorakhpur, Sindri, Barauni

Another JV by the name of Hindustan Urvarak & Rasayan Limited (HURL) comprising CIL,

IOCL, FCIL and HFCL is involved in setting up a natural-gas based 1.27mtpa plant on the

premises of FCIL’s closed fertilizer plants at Gorakhpur (UP) and Sindri (Jharkhand) and

that of HFCL at Barauni (Bihar). The three plants are being set up at an estimated cost of

INR220bn, which would have a D/E of 75:25.

Contracts have been awarded to successful bidders on a Lump-Sum Turn Key (LSTK)

basis. Construction works of all three projects are on track. Overall work progress is 86%

at Gorakhpur, 76% at Sindri and 75% at Barauni. Urea production is expected to

commence in 2021.

Setting up of coal-to-methanol plant at Dankuni Coal Complex (DCC)

CIL is exploring the possibilities to venture into Coals to Chemicals sector on standalone

basis by setting up a coal-to-methanol plant at the Dankuni Coal Complex. Coal sourced

COAL INDIA



from Raniganj coalfields shall be gasified to produce syngas, which shall be consequently

converted into methanol.

M/s Project & Development India Ltd. (PDIL) prepared the Pre-Feasibility Report (PFR)

for setting up of a 0.676mtpa capacity the coal-to-methanol plant. The project is still in

an initial stage. On 20 March, 2020, a global EOI was floated seeking inputs from

interested parties for preparation of tender document for selection of contractors for

setting-up and operation of the proposed coal-to-methanol plant on build-own-operate

(BOO) basis.

MoU with GAIL

CIL has executed a memorandum of understanding (MoU) with GAIL to explore areas of

mutual co-operation for setting up of an additional coal-to-chemical plant in the vicinity

of CIL’s high-calorific value coalfields.


COAL INDIA


Additional Data Management

Chairman Pramod Agrawal

Director (Finance) Sanjiv Soni

Director (Marketing)

S.N. Tiwary

Director (Technical)

Binay Dayal

Auditor Ray & Ray

Holdings – Top 10* % Holding % Holding

HDFC AMC 3.69 SBI MF 0.71

Reliance Capita 3.14 BlackRock Inc 0.61

ICICI AMC 1.11 ABSL AMC 0.41

GIC 1.04 Lazard 0.32

Vanguard Group 0.85 Franklin Resour 0.22

*Latest public data

Recent Company Research Date Title Price Reco

03-Aug-20 Coal India - Company Update - First sign of recovery; Company Update

165 Buy

19-Jul-20 Coal India - Cash balance: Insulation ag; Company Update

165 Buy

29-Jun-20 Coal India - Result Update Q4FY20; Value; Result Update

165 Buy

Recent Sector Research Date Name of Co./Sector Title

24-Sep-20 Metals & Mining Firm domestic prices; concerns in China; Sector Update

21-Sep-20 Metals & Mining Production cheer; Sector Update

17-Sep-20 Metals & Mining Optimism pauses for the reality check; Sector Update

Rating Interpretation

Source: Bloomberg, Edelweiss research

Daily Volume

Source: Bloomberg

Rating Distribution: Edelweiss Research Coverage

Buy Hold Reduce Total

Rating Distribution* 161 64 14 239

>50bn >10bn and <50bn <10bn Total

Market Cap (INR) 176 59 12 247

* stocks under review

Rating Rationale

Rating Expected absolute returns over 12 months

Buy: >15%

Hold: >15% and <-5%

Reduce: <-5%

TP325

TP325

TP235

TP275

TP303

TP243

100

145

190

235

280

325

Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

(IN

R)

COAL IN Equity Buy Hold Reduce0

16

32

48

64

80

Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

(Mn

)

COAL INDIA



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COAL INDIA


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