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Coal India rises after Govt allows 100% FDI in coal mining

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Coal India rose 1.67% to Rs 188.3 after the Union Cabinet on Wednesday approved 100% foreign direct investment (FDI) in coal mining.

On the BSE, 27 lakh shares were traded in the Coal India (CIL) counter so far compared with average daily volumes of 37 lakh shares in the past one quarter. The stock hit a high of Rs 188.6 and a low of Rs 182 so far during the day.

The stock hit a 52-week high of Rs 299.6 on 28 Aug 2018. The stock hit a 52-week low of Rs 177.8 on 22 Aug 2019.

The Union Cabinet chaired by the Prime Minister Narendra Modi has approved to permit 100% FDI under automatic route for sale of coal, for coal mining activities including associated processing infrastructure with an aim to attract international players to create an efficient and competitive coal market. This would be subject to provisions of Coal Mines (special provisions) Act, 2015 and the Mines and Minerals (development and regulation) Act, 1957 as amended from time to time, and other relevant acts on the subject. "Associated Processing Infrastructure" would include coal washery, crushing, coal handling, and separation (magnetic and non-magnetic)

As per the present FDI policy, 100% FDI under automatic route is allowed for coal & lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to applicable laws and regulations. Further, 100% FDI under automatic route is also permitted for setting up coal processing plants like washeries subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing.

The decision will attract international players to create an efficient and competitive coal market.

On a consolidated basis, net profit of CIL rose 22.27% to Rs 4629.67 crore on 3.64% rise in net sales to Rs 23223.00 crore in Q1 June 2019 over Q1 June 2018.

The Government of India held 70.96% stake in CIL as of 30 June 2019. The firm is the single largest coal producer in the world. Operating through 82 mining areas CIL is an apex body with 7 wholly owned coal producing subsidiaries and 1 mine planning and consultancy company spread over 8 provincial states of India.

CIL spearheads the country's coal production and produces around 83% of India's entire coal output. During 2018-19 around 81% of the company's entire coal supply was catered to power sector.

The company for the first time, had breached the 600 million tonne (MT) mark in coal production and off-take ending FY 2019 by producing 606.89 MTs of coal and supplying 608.14 MTs, clocking growths of 6.97% and 4.8% over previous year respectively.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, August 29 2019. 10:33 IST