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    Coal India

    COALINDIAGood
    Oil, Gas & Consumable Fuels·21 Nov 2023
    Management Summary

    Coal India Chairman PM Prasad led a confident earnings call post Q2 FY24, reporting strong H1 performance with ~12% production growth and coal dispatches up ~9%. E-auction premiums remained robust at 90% average despite being lower than earlier peaks. MCL recovered from a 26-day Basundhara coalfield blockade. Management reaffirmed 780 MT FY24 target and guided 840 MT for FY25, with demand projected strong for next 6-7 years supported by 80 GW new power capacity.

    Highlights

    8

    • H1 production grew ~12% with coal production on track for 780 MT FY24 target

    • E-auction premium averaged 90% over notified price in H1; BCCL 56%, ECL 71%, CCL 114%, NCL 114%, MCL 107%

    • MCL production impacted by 26-day Basundhara coalfield blockade by villagers in July; now recovered

    • H2 e-auction target set at 15% of production with expectation to reach 20% if demand permits

    • October alone saw 33% coal-based power generation growth YoY

    • FY25 production target of 840 MT; FSA commitment of 610 MT for power sector FY24

    • Capex of Rs.16,500 crores for FY24; Rs.24,700 crores planned for FMC projects over 6-7 years

    • Employee cost expected at Rs.46,000 crores for FY24; non-exec wage revision due 2026, exec 2027

    Key financials

    Metrics

    6

    Periods

    2

    Headline

    4
    • H1 Offtake
      360.66 MT
      YoY+9%
    • H1 Power Sector Dispatches
      295.36 MT
    • H1 Non-Power Dispatches
      60 MT
    • FMC Investment
      ₹24,700 Cr

    FY24

    2
    • Capex
      ₹16,500 Cr
    • Employee Cost Est.
      ₹46,000 Cr

    Segment breakdown

    • MCL204 Mn83.3%
    • BCCL41 Mn16.7%
    Donut· Share of FY24 Target

    Guidance & targets

    4
    CategoryTargetPriority
    Production
    FY24 Production
    780 million tonnes
    		High
    Production
    FY25 Production
    840-850 million tonnes
    		Medium
    E-auction
    H2 E-auction Volume
    15% of production
    		High
    Demand
    Coal demand outlook
    Sufficient for next 15-20 years
    		High

    Risks & concerns

    5
    RiskSeverity

    MCL production vulnerable to land disputes and local agitation

    26-day Basundhara blockade in July caused production loss; management resolved with Chief Secretary intervention — Management acknowledged

    medium

    E-auction premium volatility impacting revenue predictability

    Premiums volatile from 50-60% to 90% across quarters; linked to power plant stock levels and international prices — Analyst acknowledged

    medium

    Railway evacuation constraints at SECL and MCL limiting production

    5 fewer rakes daily at Korba and Talcher fields; infrastructure projects underway to add 50 rakes capacity — Management acknowledged

    medium

    No FSA price hike expected for power sector in next 7-8 months

    Non-power prices may see revision but power sector FSA untouched for next year — Management acknowledged

    low

    Areas of Evasion(1)

    • FMC payback period details somewhat vague

    Q&A highlights

    3

    “MCL...target of 204 million will be ensured...the company is in a growth trajectory”

    MCL is the largest subsidiary; 26-day blockade raised concerns about operational risk, but recovery confirmed

    asked by Amit Dixit

    1 min read4 chapters

    Detailed Narrative

    01

    Strong H1 with Operational Resilience

    CIL delivered robust H1 FY24 with ~12% production growth and 9% offtake growth despite MCL's 26-day Basundhara blockade. All subsidiaries except SECL are ahead of targets. October saw 33% coal-based power generation growth, with demand monitored through twice-weekly subgroup meetings across 3 ministries.

    02

    E-auction Strategy and Premiums

    E-auction premiums averaged 90% across CIL in H1, ranging from BCCL's 56% to CCL and NCL's 114%. Of 51 MT offered, 45.6 MT was booked. Management targets 15% of production for H2 e-auction volumes with potential to reach 20%. Priority remains fulfilling 610 MT power sector FSA commitment.

    03

    MDO and Underground Mining Expansion

    15 MDO projects initiated, with production started at 1 open-cast (CERWL, MCL) and 1 underground (SECL). Incremental MDO production expected at 20-25 MT in FY25, scaling to 55-60 MT by FY26. Underground production target of 100 MT by 2030 from current 25 MT using continuous miner technology, with cost ~2x of open-cast at Rs.2,100-2,200/tonne vs Rs.1,000/tonne.

    04

    Evacuation and Distribution Infrastructure

    Rs.24,700 crore FMC investment over 6-7 years reducing loading time from 3.5-4 hours to 45 minutes. CERL line at Raigarh commissioned with PM inauguration. Third line at Jharsuguda-Barpali under construction. Employee count at 235,000 with 5% annual attrition through natural retirement; non-exec wage revision due 2026, executive 2027.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.