The Coal India share price was up 0.78% and was trading at ₹380.45 on Tuesday at 9.32 AM. This comes after a recent Supreme Court ruling granting states the power to tax mineral rights and mineral-bearing lands retrospectively. The company will pay around ₹38,000 crore to state governments. However, it expects to recover nearly 80% of this amount through its Fuel Supply Agreements (FSAs).
In August 2024, the Supreme Court granted states legislative power to levy taxes on mineral rights and land, beyond the royalty stipulated under the Mines and Minerals (Development and Regulation) Act of 1957. The verdict clarified that royalty on minerals is not considered a tax, but rather a contractual obligation.
This ruling has led to Coal India’s large financial liability, estimated at ₹38,000 crore.
In the third quarter of FY25, Coal India’s revenue from operations stood at ₹35,779.78 crore. This demonstrates the company’s continued growth, even in light of the new tax obligations. For FY24, Coal India reported a total revenue of ₹1.42 lakh crore, which reflects its dominant position in the coal production sector.
Apart from its traditional coal mining business, Coal India has been diversifying into the mining of critical minerals. The company is also exploring international asset acquisitions to broaden its market reach.
In a strategic move, Coal India plans to launch an Initial Public Offering (IPO) for 2 of its wholly-owned subsidiaries in FY26. This includes the Central Mine Planning and Design Institute (CMPDI) and Bharat Coking Coal Limited (BCCL). News reports indicate that the Red Herring Prospectus for the IPO will be filed by May 2025.
The company intends to list 25% of its equity in both subsidiaries.
BCCL is a major coking coal producer in India, contributing approximately 50% of the total coking coal required by the steel industry. In FY24, BCCL reported a significant profit of ₹2,091.67 crore, compared to ₹530.19 crore in FY23.
Similarly, CMPDI, Coal India’s consultancy arm, posted a profit of ₹732.84 crore in FY24, up from ₹366.95 crore in FY23. CMPDI provides essential services in mineral exploration, mining, and infrastructure development.
BCCL operates 4 underground mines, 25 opencast mines, and 3 mixed mines. During FY24, BCCL produced 41.096 million tonnes (MT) of coal, with an offtake of 39.19 MT. These operations are crucial for the steel industry, which relies heavily on coking coal.
Coal India faces a substantial financial challenge due to the Supreme Court’s decision, but it is poised to recover a significant portion of the liability through its FSAs. The company’s diversification into critical minerals and its planned IPO for subsidiaries BCCL and CMPDI show a commitment to long-term growth. As one of India’s largest state-owned enterprises, Coal India continues to play a vital role in the country’s economy.
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Published on: Apr 8, 2025, 10:06 AM IST
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