Coal India Capex Spending Grows By 8.5% In April-July, 28% Of Total Annual Capex Utilised

Coal India’s capital expenditure during the four months at the start of the fiscal year from April reached almost 100 per cent of the target of Rs 4,754 crore.

Coal India saw an increase of 8.5 per cent in it’s capital expenditure during the April-July period in the current fiscal year. The public sector company reported a capex of Rs 4,700 crore for the period owing to heavy investments in evacuation infrastructure, land, and mining machinery, noted company officials. 

According to PTI, the officials stated that Coal India’s capital expenditure during the four months at the start of the fiscal year from April reached almost 100 per cent of the target of Rs 4,754 crore. The capex during the period reached 28.3 per cent of the annual capex target of Rs 16,600 crore for FY24. 

Generally, the first quarter witnesses a slow start on the capex and builds up towards the later quarters. The officials explained that the current capex growth comes over a high base of Rs 4,332 crore spent in the same period in the previous fiscal year. Notably, FY23 saw the capex touch an all-time high of Rs 18,619 crore for the company. 

The government has been encouraging public sector units to increase their capex to help boost economic growth and revive the economy. Coal India has managed to increase it’s capex by almost threefold, i.e., 197 per cent. The capex for FY23 stood at Rs 18,619 crore, a huge jump from Rs 6,270 crore in FY20 (2019-2020).

During last year, land expenditure came to about Rs 1,311 crore, contributing to 28 per cent of the total capex spend for the April-July period in 2023. The next big contributor to capex was the procurement of heavy earth moving machinery (HEMM) which took about 23 per cent of the total and stood at Rs 1,083 crore. 

The officials explained that to sustain the production momentum, land acquisition and strengthening of the modernised mining fleet are the major components to focus on. While, the capex dedicated to the construction of rail sidings and rail corridors and coal handling plants and silos (for quicker coal evacuation) stood at Rs 664 crore and Rs 572 crore, respectively. 

For the current year, the budgeted provision for rail sidings and corridor construction stands at Rs 4,169 crore, the highest component of the capex for FY24, while the amount of Rs 2,907 crore has been sanctioned for land acquisition in the current year. The construction of coal handling plants (CHPs)/silos stands at Rs 2,174 crore and about Rs 1,965 crore has been allocated for procurement of HEMM in FY24. 

The official further stated that the company’s production will increase in the coming years and therefore, it is focusing on ensuring seamless coal transportation. Therefore, major investments are being made to enhance the coal evacuation infrastructure and first-mile connectivity projects for the same purpose, the report added.