Even if it will not get anything from the spoils of its R14,000 crore mega IPO next month, cash rich Coal India Ltd, has earmarked a capital expenditure of R19,000 crore as it plans to become the world's first company to have over 500 million tonnes annual coal production.
The company is investing over R11,000 crore in 77 projects that will add a capacity of 184.8 million tonnes (mt) over the next five years. Out of this, 32 projects with an aggregate capacity of 104 mt have already been implemented and another 25 projects with an estimated capex of R3,385.7 crore and aggregate capacity of 47.5 mt will be operational by the end of fiscal 2012.
The company is also investing R2,327.5 crore in 20 coal beneficiation facilities— 15 non coking and 5 coking—with an aggregate additional feedstock facility of 111.1 mt. Beneficiation of coal will help the company command better prices for its wares.
"Coal is the only core commodity where price increase has lagged the rate of inflation over the last decade," said Partha S Bhattacharya, chairman and managing director, CIL.
"Prices of coal went up by 4.9 per cent since January 2010. We sell coal at 50 per cent of international prices and make a 30 per cent profit out of it. Through beneficiation and washeries we will improve the quality to international standards, which will enable us to command an even better price," he said.
Another R6,000 crore has been allocated for acquisition of international coal assets where it plans to make equity investments in coal mining projects together with strategic partners. The company is in talks with at least three investors including US based Peabody Energy Corp to form a joint venture for this purpose.
"We had selected five companies for this purpose which has now been pruned to three," said Bhatacharya.
Post listing in October, the PSU is expected to be elevated to the position of a maharatna.