Capex tar­get for FY2018 is Rs8,500 crore: Coal In­dia

Mint ST - - IN-DEPTH - BY LATHA VENKATESH, SURABHI UPADHYAY & NIGEL D’SOUZA CNBC-TV18

Coal In­dia Ltd chair­man Gopal Singh com­ments on the miner’s wage bill, coal pro­duc­tion tar­gets, pric­ing and prof­itabil­ity. Edited ex­cerpts:

If you can take us through what ex­actly is go­ing to be the hit be­cause of the in­crease in the wage bill and how much of it you have al­ready pro­vided for? In your pre­vi­ous con­ver­sa­tion, you said you are pro­vided for the part of the in­crease?

This wage agree­ment has been unique in var­i­ous facets. The main thrust has been to make the dream of hon­ourable Prime Min­is­ter come true that is to pro­vide re­li­able and af­ford­able power for all to in­crease the pro­duc­tiv­ity, to pro­vide so­cial se­cu­rity to our work­men, to take care of the life af­ter retirement, med­i­cal ben­e­fits of the work­men, to en­sure has­sle-free pay­ments of al­lowances to work­ers etc.

That will boost the morale, it will im­prove the work-life bal­ance and will re­sult in team spirit and that will en­able Coal In­dia to achieve what it has never been done so far.

So what­ever the outgo will be there in terms of wages in­crease, that will be 100% com­pen­sated by im­prove­ment in pro­duc­tion, pro­duc­tiv­ity. For the mo­ment, if you can tell us the arith­metic. We were told it is a Rs 5,700 crore wage bill, how much was al­ready pro­vided for?

Ex­act num­ber I can­not give you but ma­jor part of it has been pro­vided for and bal­ance what­ever is left, will be pro­vided in the profit and loss ac­count of this year only.

The outgo for the first year is only Rs4,397 crore. This Rs5,700 crore is the av­er­age of five years.

I am look­ing at some bro­ker­age notes as well, there is one for­eign bro­ker­age their arith­metic says that you need to in­crease your fuel sup­ply agree­ment (FSA) prices by about 5% to off­set this higher wage bill, is that a pos­si­bil­ity, are you look­ing at hik­ing FSA prices? I would not like to com­ment be­cause we are a listed com­pany.

Give us some sense in terms of pric­ing? You might not want to talk about the fuel sup­ply agree­ment bit but e-auc­tion prices, are they trend­ing higher, what is the sense that you get and do you have the elas­tic­ity to tinker around the FSA price right now on the up­side?

This is for Coal In­dia board to take a call. We will de­cide what­ever is most ap­pro­pri­ate for the na­tion as a whole. Can you give us some clar­ity in terms of what could be the op­er­at­ing cash flow for FY18, will it be in the range of around Rs14,000-15,000 crore and if you could give us a sense of what is the capex over there?

This year, capex tar­get we have set for our­selves is Rs8,500 crore and ac­tual num­ber maybe more than this be­cause we have to grow to 1 bil­lion tonnes and it was an­nounced in 2014 when this govern­ment came into ex­is­tence, so we have to achieve the tar­get, the mile­stone of 1 bil­lion tonnes. So we have to build the ca­pac­ity. So though we have set a tar­get of Rs8,500 crore only this year but ac­tual in­vest­ment will be more. What about your op­er­at­ing cash flow, will it be at around Rs 15,000 crore? The rea­son I ask this is be­cause—can you con­tinue to pay the div­i­dends that you have been pay­ing in the past? If you do Rs15,000 crore and if you are go­ing to be spend­ing capex of around Rs9,000 crore plus you add this wage in­crease, there is not go­ing to be much left on the ta­ble.

This in­for­ma­tion I would not like to dis­cuss.

Some very rough num­bers?

Please don’t force me to com­ment on this num­ber. Op­er­at­ing cash flow would be some­thing that you can give us a ball­park fig­ure? You have a fig­ure for capex, you have a fig­ure for the wage bill in­crease, so we were won­der­ing if you also can give us a fig­ure for the op­er­at­ing cash­flow? It is usu­ally some­thing which other chair­men have given us in the past, that is the only rea­son I am ask­ing. You don’t want to re­veal that num­ber?

What­ever fig­ures we are sup­posed to re­veal, it is al­ready in the pub­lic do­main.

In Septem­ber 2017, you said you are go­ing to do 15-16% in terms of growth of dis­patches, you did it. Now the street is ex­cited, what the street wants to know is 600 mil­lion tonnes (MT) you said you are go­ing to do for this year which again is a tall ask but you said you are go­ing to do it but the run-rate would be roughly around 54 MT ev­ery month from hereon, are you up to the chal­lenge, are you very sure 600 MT is pos­si­ble? Yes. When­ever there has been the need, Coal In­dia fam­ily has come up and they have proved. This time—we are tar­get­ing 600 MT, which means in­cre­men­tal growth of 46 MT over last year.

Last year was not good but if you look at the pre­vi­ous year, in­cre­men­tal growth was 44 MT and that was the high­est in the his­tory of Coal In­dia and this year the team is fully geared up to set an­other mile­stone that is 600 MT where the in­cre­men­tal growth will be 46 MT which will be high­est ever.

In Septem­ber, this team has proved, the growth in pro­duc­tion was more than 10% and this month, Oc­to­ber, also—in Septem­ber we had Durga Puja and be­cause our mines are sit­u­ated in the east­ern part of the coun­try Bi­har, Ben­gal, where Durga Puja is cel­e­brated on a large scale. In spite of that dis­rup­tion in pro­duc­tion in the last week of Septem­ber, the growth recorded was 10% and this month again Oc­to­ber 1 and 2 Oc­to­ber was a hol­i­day, in spite of that there is a growth of 11% in pro­duc­tion.

IN­TER­VIEW

INDRANIL BHOUMIK

Coal In­dia chair­man Gopal Singh.

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