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"Concentration of Risk" is a Challenge for CIL's 1 Billion Production Target

News

Coal India's plan to double production to almost 1 billion tonnes by 2020 hinges precariously on the successful completion of 25 key projects that are meant to deliver half the targeted output.

Source: ET

 

SNP Insight

High future expenditure plan on coal infrastructure development to achieve 1 billion production may put stress on the financial strength of CIL . Also in same time increasing operating expenses and falling demand of coal in Indian market can make the viability of future investment plan little cloudy. And thereby targeting only 25 coal mines to produce nearly 50% targeted production may further increase future risk factors. To overcome this, CIL can follow the foot step of oil producing companies which are planning to introduce more Automation process to reduce operating expense and cost of production.

 Source: SNP Infra Research