Coal India: The 7th Maharatna PSU that has Shaped India's Energy Landscape.

Coal India Limited (CIL) is a state-owned, 7th Maharatna PSU (Public Sector Undertaking) coal mining company in India, which is responsible for producing over 80% of the country’s coal. Established in 1975, Coal India has grown to become the world’s largest coal producer by volume, with operations spanning across eight states in India.

Coal has been the backbone of India’s energy industry for decades, and Coal India Limited (CIL) is the country’s largest coal-producing company. With its vast reserves of high-quality coal, CIL plays a critical role in meeting India’s energy needs, powering the country’s industries, and fueling economic growth.

Coal India: The 7th Maharatna PSU that Powers India.

Coal India Introduction:

Coal India Limited (CIL) is a state-owned Maharatna PSU (Public Sector Undertaking) that was formed in 1975 with the nationalization of coal mines in India. It is the world’s largest coal producer, with 83 mining areas spread across eight states in India. CIL has a vast workforce of over 270,000 employees, making it one of the largest employers in the country.

Coal is the primary source of energy in India, accounting for over 80% of the country’s total energy consumption. CIL is the main supplier of coal to the power and steel industries in India, which are critical to the country’s economic growth. With its vast reserves of high-quality coal, CIL has played a crucial role in meeting the energy needs of India’s industries and households.

Coal India’s History and Growth.

CIL was formed in 1975 as a result of the nationalization of coal mines in India. Prior to that, coal mining was mostly in private hands, and the industry was highly fragmented. The government of India saw the need to create a state-owned company to streamline the coal mining industry and improve production efficiency. CIL was formed by merging several state-owned coal mining companies, and it has since grown to become the world’s largest coal producer.

CIL’s growth has been driven by its vast coal reserves, which are estimated to be around 319 billion metric tons. The company’s mining operations are spread across eight states in India, including Jharkhand, Odisha, West Bengal, Madhya Pradesh, Uttar Pradesh, Chhattisgarh, Maharashtra, and Assam. CIL operates over 400 mines, including underground and open-cast mines, and produces different grades of coal to meet the diverse needs of its customers.

Coal mining has played a critical role in India’s energy landscape, and the industry has undergone significant changes over the years. From a primarily private enterprise to government control, the industry has evolved to become more organized and efficient.

In this article, we explore the history and evolution of coal mining in India.

The Birth of National Coal Development Corporation (NCDC)

In September 1956, the Government of India established the National Coal Development Corporation (NCDC), which marked the beginning of the government’s involvement in coal mining. The primary objective of NCDC was to fulfill the country’s growing energy requirements and support the rapid industrialization taking place through Five-Year Plans.

Singareni Colliery Company, which was operating in Andhra Pradesh since 1920, was also brought under government control in the same year when the Central and State governments acquired 45% and 55% shares, respectively.

Nationalization of Private Sector Coal Mines

In 1971, the government of India nationalized all the 214 coking-coal mines and 12 coke-ovens running in the private sector, excluding those held by TISCO and IISCO for their captive use. Bharat Coking Coal Limited (BCCL) was formed on January 1, 1972, to take control of these nationalized mines and coke-ovens.

On January 30, 1973, all the remaining 711 non-coking coalmines in the country’s private sector were also nationalized. 184 of these mines were handed over to BCCL, and the remaining 527 were handed over to a newly opened department called the Coal Mines Authority. Four months later, on June 14, 1973, this department was converted into a separate government company called CMAL. NCDC, which was formed earlier in 1957, was merged with CMAL, and 45% shareholding of the Central Government in Singareni Collieries Company Ltd was also transferred to CMAL.

Formation of Coal India Limited (CIL)

On November 1, 1975, the government formed a new public-sector company called Coal India Limited (CIL) to enhance the organizational and operational efficiency in the coal sector. All the four divisions of CMAL were given company status and were brought under CIL along with BCCL. The 45% shareholding of CMAL in Singareni Collieries Company was also transferred to CIL, and CMAL was closed.

CIL started functioning with five subsidiary companies under it, including Bharat Coking Coal Limited (BCCL), Eastern Coalfields Limited (ECL), Central Coalfields Limited (CCL), Western Coalfields Limited (WCL), and Central Mine Planning & Design Institute Limited (CMPDIL). In due course of time, three more companies were formed under CIL by carving out certain areas of CCL and WCL, which were Northern Coalfields Limited (NCL), South-Eastern Coalfields Limited (SECL), and Mahanadi Coalfields Limited (MCL).

Conclusion

In conclusion, the coal mining industry in India has undergone significant changes over the years. The government’s involvement in the industry has led to greater efficiency, organization, and better control. The formation of CIL has enabled the industry to function with greater coherence and enhanced productivity. With the country’s growing energy requirements, the coal industry in India is likely to continue playing a crucial role in the country’s energy landscape.

Coal India’s Role in India’s Energy Sector.

Coal is the primary source of energy in India, and CIL plays a crucial role in meeting the country’s energy needs. CIL supplies coal to the power and steel industries in India, which are critical to the country’s economic growth. The power sector is the largest consumer of coal in India, accounting for over 80% of the total coal consumption. Coal is used to generate electricity, and India’s power sector is heavily dependent on coal-based power plants.

CIL supplies coal to all the major power utilities in India, including NTPC, DVC, and TANGEDCO, among others. The company also supplies coal to the steel industry, which uses coal as a raw material in the production of steel. CIL’s high-quality coal is in great demand by the steel industry, as it helps to improve the quality of steel and reduce the production cost.

Coal India’s Corporate Social Responsibility.

As a state-owned company, CIL has a strong commitment to Corporate Social Responsibility (CSR). The company has implemented several CSR initiatives to improve the quality of life of the communities living near its mining areas. CIL’s CSR initiatives are focused on areas such as education, healthcare, and infrastructure development.

CIL has established several schools and hospitals in the areas surrounding its mining operations, providing quality education and healthcare facilities to the local communities. The company has also undertaken several infrastructure development projects, such as building roads and bridges, to improve connectivity in the region. CIL has also implemented several environmental protection measures, such as afforestation and planting of trees, to reduce the environmental impact of its mining operations.

Conclusion:

Coal India Limited (CIL) is a Maharatna PSU that plays a critical role in meeting India’s energy needs. As the world’s largest coal producer, CIL has a vast reserve of high-quality coal and a workforce of over 270,000 employees. The company supplies coal to the power and steel industries in India, which are critical to the country’s economic growth. CIL’s commitment to Corporate Social Responsibility (CSR) has led to the implementation of several initiatives to improve the quality of life of the communities living near its mining areas. With its vast reserves of coal and commitment to CSR, CIL is a crucial player in India’s energy industry and an essential contributor to the country’s economic growth.

Analyzing Coal India Technicals at CMP- 223₹

Before we dive into the technical analysis of Coal India, it’s important to understand what we mean by technicals. In stock trading, technicals refer to the analysis of charts and other statistical data to identify trends and patterns. Technical analysis is used to predict future price movements based on past price behavior.

Price Trend Analysis:

One of the most important aspects of technical analysis is analyzing the price trend. The current price of Coal India is 223, which is near its 52-week low of 207.15. However, the stock has been trading within a range of 207.15-282.25 over the past year, with no clear trend in either direction.

Support and Resistance Levels:

Support and resistance levels are key levels on a stock chart that indicate the price at which buyers or sellers are likely to enter or exit a trade. In the case of Coal India, the support level is around 200-207, while the resistance level is around 240-245.

Moving Averages:

Moving averages are a commonly used technical indicator that can help identify trends and potential reversals. The 50-day moving average for Coal India is currently at 235, while the 200-day moving average is at 229. This suggests that the stock is currently trading below its long-term average.

Relative Strength Index (RSI):

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. A reading above 70 indicates an overbought condition, while a reading below 30 indicates an oversold condition. Currently, the RSI for Coal India is at 41, which suggests that the stock is neither overbought nor oversold.

Potential Risks:

While Coal India is a well-established company with a dominant market share, there are several potential risks that investors should be aware of. These include:

Regulatory risks: The Indian government has been pushing for greater use of renewable energy sources, which could impact the demand for coal in the long term.

Environmental risks: Coal mining is a highly polluting industry that can have a significant impact on the environment.

Geopolitical risks: India’s relations with neighboring countries, particularly China, could impact the demand for coal exports.

Conclusion:

In conclusion, the technicals of Coal India at 223 suggest that the stock is currently trading below its long-term moving average and is neither overbought nor oversold. However, there are several potential risks that investors should be aware of, including regulatory, environmental, and geopolitical risks. As always, investors should conduct their own research and seek professional advice before making any investment decisions.

Coal India Ltd. {CIL}	Buy
Duration	Long Term – (1-3 Yrs)
CMP	223₹
Book Value Per Share	71.10₹
Recommendation Date	03-03-2023
Target	450₹
Dividend Paid Since Listing	142.15₹
Bonus Share Issued Since Listing	No Bonus
Buy Back Since Listing	1
Last Buy Back Rate	235₹
Lifetime High	447.10₹
Lifetime Low	109.55₹
President of India Holding	66.13%
FII Holding	7.86%
Mutual Fund Holding	8.78%
Public Holding	17.23%