CIL surpasses targeted Q1 capex despite Covid crisis

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Published: July 10, 2020 8:04 AM

“Capex is a key scoring performance parameter in the memorandum of understanding that CIL signs every year with the ministry of coal,” a senior CIL executive said.

CIL, Coal India, Covid-19 slowdown, capex, capex utilisation, NCL,CCL, CPSEThe capex utilisation of the miner received a boost from three of its subsidiaries — South Eastern Coalfields (SECL), Northern Coalfields (NCL) and Central Coalfields (CCL).

Mining monolith Coal India (CIL) has surpassed its targeted capital expenditure (capex) of Rs 720 crore and has actually spent Rs 844 crore during the first quarter of the current fiscal amid the Covid-19 slowdown. The capital expenditure was 117% of the targeted one and 4.2% more compared with the one spent during the corresponding period last fiscal.

The PSU miner had spend Rs 810 crore as capex in April-June 2019. “Capex is a key scoring performance parameter in the memorandum of understanding that CIL signs every year with the ministry of coal,” a senior CIL executive said.

The capex utilisation of the miner received a boost from three of its subsidiaries — South Eastern Coalfields (SECL), Northern Coalfields (NCL) and Central Coalfields (CCL). These accounted for 81% of the capital expenditure, ending June quarter.

SECL topped the list with Rs 435 crore of spending followed by NCL with Rs 149 crore and CCL with Rs 102 crore. Of the actual capex of Rs 844 crore, heavy earth moving machinery (HEMM) and other plants and machinery accounted for Rs 393 crore. This was followed by the amount spent on coal evacuation transportation infrastructure like first-mile connectivity including coal handling plants, silos, crusher, railway sidings/corridors worth Rs 241 crore. Mine development, exploration and prospecting amounted to Rs 80 crore and Rs 66 crore, respectively.

An official said though equipment have been procured, there are delays in deploying them because of the Covid-19 situation and for some unrest within the company for the grant of commercial mining.

Subsidiary-wise the combined capex plan and capital budget of CIL as a whole for FY21 is pegged at Rs 10,000 crore. While the plant and machinery portion, including procurement of HEMM, comprises the major share with over Rs 3,700 crore for the year, the expenditure on land acquisition and rehabilitation & resettlement involve more than Rs 1,900 crore. These two heads make up around 57% of the overall capex of FY21.

The balance of 43% is made up by the expenditure on transportation of coal evacuation; mine development; wagon procurement; others including ERP, solar initiatives, R&D, vehicles; exploration; buildings, water supply and environment.

The MoU that CIL enters into with the government is formulated on the basis of the guidelines laid down by the department of public enterprises. It is a negotiated agreement and contract between the government and the company management to evaluate the performance of the CPSE at the end of the year vis- a-vis the targets fixed at the beginning of the year.

CIL has been mostly meeting its annual capex target and has been expanding mines according to plans. Sometimes slippages in production targets have been mostly for other external factors, such as natural calamity, in which CIL has little hand.

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