Coal India Limited

Industry Profile : Mining as primary sector of economics is very important for development. Not for employment but utilization of natural resources. Minerals constitute the back-bone of economic growth of any nation and India has been eminently endowed with this gift of na­ture. There are many evidence that exploitation of minerals like coal, iron-ore, copper, lead-zinc has been going on in the country from time immemorial. The Mining industry in India is a major economic activity which contributes significantly to the economy of India. The GDP contribution of the mining industry varies from 2.2% to 2.5% only but going by the GDP of the total industrial sector it contributes around 10% to 11%. Even mining done on small scale contributes 6% to the entire cost of mineral production. Indian mining industry provides job opportunities to around 700,000 individuals

However, the first recorded history of mining in India dates back to 1774 when an English Company was granted permission by the East India Company for mining coal in Raniganj. M/s John Taylor & Sons Ltd. started gold mining in Kolar Gold Fields in the year 1880. The first oil well was drilled in Digboi in the year 1866 – just seven years after the first ever oil well was drilled anywhere in the world viz. in Pennsylvania state, USA in 1859. Mining activities in the country however remained primitive in nature and modest in scale uptill the beginning of the current century. Thereafter, with progressive industrialisation the demand for and hence the production of various minerals gradually went up. After India became independent, the growth of mining under the impact of successive Five Year Plans has been very fast. There are ambitious plans in coal, metalliferous and oil sectors to in­crease production of minerals during the 8th Five Year Plan and thereafter.

Company Profile  :  Coal India is Holding cmpany of seven companies and one mining consultancy company. with its capacity above 400+ million tonne it is single largest coal miner. India being third largest producer of Coal after China and US. The company holding 82 mining areas. Coal India is behind 40% commercial energy production and for 80% coal mining. company supply 98 out of 101 power plants with discounted price then international Coal Prices.

Shareholding Pattern  :  Govt of India hold 78.86%. 2.13% held by Mutual funds as the company is on index. 2% institutions and bank. 7.55% held by insurance companies. 6.46% held by Foreign investors. Remaining is held by public.

Financials and Ratio  : 

 2010-112011-122012-132013-142014-152015-16
Revenue55,101.4269,952.3377,049.4377,779.4080,690.7183,738.57
Net Profit10,867.3514,788.2017,356.3615,111.6313,726.6114,274.29
NPM21.6323.6925.4121.9618.5118.29
EPS17.1923.4727.6323.9221.7322.60
Book Value52.7464.0476.7467.1363.8953.67
Dividend per share 3.9010142920.727.4
Dividend payout22.6642.7150.94121.2195.25121.24
ROE32.6236.5535.8035.6334.0142.11
ROCE18.3520.3220.6818.9316.7118.12
ROA12.6513.8214.2714.4912.4112.95
Debt to equity0.040.030.0200.010.04
asset turnover58.4958.3656.186667.0570.77

Future Prospectus  :  All due to the business model, there is huge cash on balance sheet. its completely acceptable that if the company is owned by govt, it it will try to use that cash for covering Fiscal deficit. But when size of Dividend is larger than profit made by company then it is not good for company. Coal India is not the company which is consolidating. It is growing its production. for that the company need cash. Govt treat it as cash cow and trying to cover their deficit from cash on balance sheet. It is affecting the balance sheet as now the quality of balance sheet is deteriorating.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter