Detailed Narrative
Lignite Operations and Future Growth Strategy
GMDC reported a lignite production of 8 million tons in FY25, falling short of its 10 million ton target due to a safety incident at Rajpardi mine and land acquisition delays at Bhavnagar. For FY26, the company targets a 10-15% volume growth from its four existing lignite mines. Long-term, GMDC aims to achieve 15 million tons of lignite production from Gujarat-based mines by 2035, with 70% expected from newer mines like Lakhpat, Walia, and Damlai, which are currently undergoing statutory clearances.
Coal Mine Development in Odisha
Significant progress has been made on the Baitarani West coal block in Odisha, which is projected to become GMDC's largest mine with a capacity of 15 million tons per annum. Groundbreaking is expected in FY26, with initial production of approximately 1 million tons in the same year, rapidly ramping up to 3 million and then 5 million tons. The company will be mindful of international and Coal India pricing, aiming for its own market-driven price point rather than the lower notified prices of Coal India.
Critical Mineral Projects (Copper & Rare Earth)
The multi-metal project at Ambaji has been renamed Copper Project Ambaji and is a complex underground mine, the first of its kind in Western India. It requires substantial CAPEX and technical work, with contributions expected by FY28. For rare earth elements, steady work is ongoing following an LOI, with commercialization anticipated in a few years. Bauxite operations are also planned for scaling up, with existing mines in Saurashtra and Kutch now contributing positively to revenues.
Power Division Challenges and New PPA
The ATPS power plant is currently running behind schedule due to critical delays in receiving spares from abroad, resulting in a Q4 FY25 loss of ₹11 crores on ₹25 crores revenue. Management expects a better future for the division after an overhaul this year. A new Power Purchase Agreement (PPA) has been signed, which will make power approximately 30 paisa more expensive but allows GMDC to recover past investments, including ₹300-400 crores spent on plant upgrades.
Project Shikhar and Long-Term Capital Allocation
GMDC reaffirmed its ambitious Project Shikhar target of achieving ₹14,500 crores in FOREX by 2030, acknowledging minor quarter-level shifts but maintaining the overall goal. The total CAPEX for this journey is projected at ₹13,000 crores by 2030, with a steady annual spend of ₹1,500-2,000 crores. This CAPEX is allocated with 46% for land, 15% for R&R, and 30% for plant and machinery, and will be funded through existing reserves (₹2,000 crores) and a line of credit, with no new debt expected in FY26.