Coal India Targets Rejoining Dividend List by FY 2025-26 as ECL Performance Improves

Coal India is working to erase Rs 2,200 crore in losses at its subsidiary, Eastern Coalfields Ltd (ECL), by the fiscal year 2025-26. This move aims to bring ECL back into the dividend-paying list, according to a senior official. Bharat Coking Coal Ltd, another subsidiary that previously faced losses, has already resumed paying dividends.

Representative image

Coal India chairman P M Prasad expressed optimism about ECL's future at a recent foundation day event. He stated that ECL is on track to meet its production target of 54 million tonnes this year. Prasad mentioned that they expect to clear two-thirds of ECL's accumulated losses within this fiscal year and eliminate the rest by the next year.

Production Challenges and Targets

Prasad acknowledged potential production challenges due to monsoon impacts in the coming months. Despite these hurdles, Coal India is projected to produce around 823 million tonnes by March. This figure falls short of the initial target of 838 million tonnes for FY25, despite an anticipated growth rate of nearly 7% in the remaining months.

In October, year-on-year production saw a modest increase of only 2.3%. Prasad highlighted the Gevra mine under South Eastern Coalfields as a significant contributor to future growth. The mine aims to become the world's largest with a production target of 70 million tonnes in two years, up from its current output of 59 million tonnes.

Future Production Goals

By FY25, Gevra's production target is set between 61-62 million tonnes. Looking further ahead, Coal India plans to increase underground production to 70 million tonnes by 2030, compared to the current fiscal target of 34 million tonnes. In FY24, underground production was recorded at 28 million tonnes.

If Coal India can boost its output by 50-60 million tonnes, it could significantly cut down on thermal coal imports, which currently impact foreign exchange reserves. The company's overall production goal is set at 1 billion tonnes by FY 2026-27.

Infrastructure and Connectivity Improvements

Prasad emphasised Coal India's focus on improving first-mile connectivity to address overloading and underloading issues that cost Rs 150-200 crore annually. The company plans to add 150-200 km of connectivity each year. Achieving a production level of 900 million tonnes would help eliminate these issues.

"Once we reach the 900 million tonne level, both overloading, which affects railways, and underloading, which causes Rs 150-200 crore in losses, will be eliminated," Prasad said.

Diversification and Solar Initiatives

The company is also exploring diversification and solar energy initiatives as part of its broader strategy. The event was attended by Coal Minister G Kishan Reddy and other senior officials. Reddy noted that coal is expected to remain a key component in India's energy mix for the foreseeable future.

This strategic focus on increasing production and improving infrastructure highlights Coal India's commitment to reducing imports and enhancing domestic capabilities in the energy sector.