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Singareni Collieries Company Limited (SCCL) is calling for expression of interest (EoI) next week for the acquisition of a coal mine with an annual production capacity of 5-million tonne in countries including Indonesia and South Africa.
“We think this is the right time to enter into overseas acquisitions as the coal assets are available at lower prices owing to the fall in global coal prices,” N Sridhar, chairman and managing director of SCCL said on Thursday.
The company is already in talks with large public sector players like Coal India Limited (CIL) for a possible tie up in this endeavour and is also looking to form joint ventures with private sector players who own coal mines in the respective countries, according to Sridhar.
The Telangana government, which holds 51 per cent controlling stake in the 125-year-old coal mining company, had given its mandate to SCCL to expand its geographical presence through overseas acquisitions.
The Centre, which holds the remaining 49 per cent stake in the jointly held company, recently allocated Naini coal block with 500-million tonne coal reserves in Odisha to Singareni besides reallocating Talcher block in Telangana following the cancellation of coal block allocations under the Supreme Court directions. The company expects to complete the pre-development formalities, including land acquisition, at Naini in a year or so.
Sridhar said they intended to make a beginning in overseas acquisitions by acquiring a coal mine, either new or an operational one having at least 100 million tonne reserves so that they could produce 5 million tonnes annually.
On whether looking at overseas opportunities was a sensible move considering the plight of several private Indian players who went on to develop coal assets abroad but got stuck for various reasons, Sridhar said many private players were in distress because they had bought the mines when the prices were very high.
On the joint ventures with private players, he said they would look for a partnership with those already in possession of coal assets in countries like Indonesia and South Africa as keeping a local partner was also mandatory in those countries. He refused to say how much funds they have earmarked for this purpose while stating that the cost of acquisition would only be known once they see the response to the EoIs next week.
Coal production
SCCL achieved a total coal production of 52.53 million tonne in 2014-15, an increase of 4 per cent over that of the last year’s production as the year went off without any strikes. Gross turnover was up 19 per cent at Rs 14,083 crore from Rs 11,870 crore in the previous year. Profit after tax is expected to be much higher than Rs 418 crore it reported for the last financial year, according to the company.
Interestingly, the cost of production has come down to Rs 1,997 per tonne during the year as compared with Rs 2,120 per tonne in the previous year while sales realisation has gone up to Rs 2,120 per tonne from Rs 1,951 per tonne in the previous year. “Improved productivity and savings on fuel costs among other things have helped in lowering the cost of production despite the increase of salary bills,” he said.
The company has set an internal production target of 60 million tonne for 2015-16 as against the official target of 56 million tonne, as it wants meet the coal needs of power-starved Telangana, which expects to add 6,000 Mw of new thermal power capacity in the next 3-4 years.
It would import 1 million tonne coal this year for blending and for the requirement other industrial consumers.
The 1,200-Mw pit-head project being developed by SCCL and a 600-Mw project of Telangana Genco are expected to be ready by the year-end and they alone would require an additional 5 million tonne coal, according to Sridhar. “In all, we need 18-20 million tonne additional coal in the next five years to meet the power sector demand in Telangana. We have drawn a five-year action plan for that as well,” he said.
The company, which proposes to develop 3-4 new mines every year, has lined up a capital investment of Rs 2,390 crore, mostly for the development of mines and for purchase of mining machinery.
