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Coal India Ltd
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Ladies and gentlemen, good day, and welcome to the Q2 FY '22 Earnings Conference Call of Coal India hosted by Prabhudas Lilladher Private Limited. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Kamlesh Bagmar from Prabhudas Lilladher Private Limited. Thank you, and over to you, sir.
Thank you, Jacob. Good evening all, and thanks for logging in the call. We are pleased to host Mr. Pramod Agrawal, the Chairman and Managing Director of Coal India for an investor call post Q2 FY '22 earnings and to discuss his views on the coal sector. Along with him, we have Mr. S. N. Tiwari, Director of Marketing; Mr. Samiran Dutta, Director Finance; and Mr. Viswanathan, the Company Secretary. Now I hand over the call to Mr. Agrawal for his opening remarks, which will be followed by Q&A. Over to you, sir.
Good afternoon. Thank you, Kamlesh, for arranging this con call. I'm really thankful to everybody for participating in this. We have uploaded our latest figures, et cetera, on the site in the form of presentation. I hope everybody would have gone through it. So I think there is nothing further for me to add. I'll rather go for the question-and-answer session. And in that, I will explain whatever points that you will expect me to explain. Thank you. Let's start with the question and answer.
[Operator Instructions] The first question is from the line of Amit Dixit from Edelweiss.
I have a couple of questions. The first question is on the grade mix that we had for FSA in Q2? And how does it compare to Q1?
Grade mix, what do you mean by grade mix? Means average grade for the Q1 and Q2? Are you asking that question?
Yes, sir, that would help.
G11.
Generally, it is G11, and it was in G11 when in Q1 also. There has not been any change in the grade mix.
Sure. Why am I asking because there was no change [indiscernible] FSA realization actually went down slightly, I mean in Q2. So I just thought it might be due to some grade change and all, that's it.
It may be because there's more supply to power sector. And as you know that for power sector, we charge 20% less price. Whatever extra we have supplied has gone -- mostly has gone to power sector. And that's why the average realization would have gone down compared to the last thing -- from FSA.
Okay, sir. The second question is on e-auction. In terms of e-auction volume, what is the likely volume to be offered in Q3? And premium actually deferred. And what could be the likely volume you would offer in Q4?
See, this year, last year, we had auction, means the firm figure was about 50 million tonnes that was given in the last 2 quarters. And I hope that we will be giving almost the same quantity of coal. Means offering if this will be less because the last time the materialization during the auction was less. But this time, materialization is very high. So slightly more amount will account -- slightly more quantity will be offered. But then I think we will be able to sell off about 40 million to 50 million tonnes in the e-auction this year. But that will depend how the coal situation in the thermal power stations are. If the power demand increases tremendously and we have to face that situation, then perhaps this figure, we will have to reduce.
And what is the premium achieved sir, so far in, I mean, 2 months of [indiscernible]?
In this year, we are achieving almost 45% to 50%. In the last quarter, it might have been slightly higher. On average in this year, we have achieved 45% to 50%. But today, the question of premium is not there. It's a question of supply, whatever we offer, the premiums are very high.
Okay. Sir, I mean, the point of asking the question was that in October and November, particularly in October, we get to hear that the supply -- e-auction was very less. So is it possible to quantify the supply until now and until November '20 or something?
I won't be able to compare October to October or November to November, but then overall, till October end, our supply has been 3 million tonne extra than what it was last year. See there are 2 things: In October, the supply for this e-auction would have been less because of the power crisis in the country and the stocks going down in the powerhouses, we had to give extra supply to powerhouses. Actually, in October, we supplied almost 56 million tonnes to powerhouses, which was about 4 to 5 million tonnes more than the last year. Then the second thing that happened in the initial week of October, there was heavy rainfall. And because of that -- and even during another week, there was heavy rainfall. Because of this, dispatches were late. But the fact remains that our supplies were much higher than last year. But most of the increased supply or even otherwise, the supply went to powerhouses because there, it was an urgent situation where we were required to increase the stocks in powerhouses.
The next question is from the line of Bharanidhar Vijayakumar from Spark Capital.
Am I audible now?
Yes, you are.
Yes. Can you give a color of the special forward e-auction for power, the number in the overall e-auction sales in, say, FY '21? And how it will be for FY '22, given we have stopped the e-auction sales through other modes?
We have not stopped e-auction through other modes, we had reduced during October. Actually, this year, till now we have auctioned about -- total quantity booked is 70 million tonnes, which is almost at the same time, which was done till the -- during the last year until this period -- during this period last year also. So we have not stopped it. But the extra supplies that we have done about 59 million tonnes or 56 million tonnes of extra coal that was supplied, it has gone mainly to powerhouses. That is the point I was trying to make. It is not that we have reduced the supplies to NRS. Expectations from all the sectors from Coal India have increased tremendously because of the increased price. And hence, there is this. But that fact remains that during October, definitely supplies to this e-auction thing has reduced. Special Forward, we have got almost -- especially 34% to 35% extra premium -- premium of 35% till now, average premium. And last year, the premium was hardly anything. I don't have that figure, but then last year, it was hardly 7% or 8%.
So do we expect the e-auction sales in FY '22 to be similar to last year's number of, say, 95 million tonnes?
Last year, the total booking was 120 million tonnes. We will try to achieve that figure. But giving any firm commitment at this point of time will be difficult because I don't know how the power demand is going to pan out. The expectations from power sectors are very high. If their expectations prove to be right, then perhaps this figure will get reduced.
Sir, I understand this 124, is it booking, right? So I'm talking about the sales. Actual sales was around 94 million tonnes, if I am not wrong.
Yes, 94 million tonnes. The sale will be in the -- again, the same things remain. If we don't do booking, there will not be any sale. So it will depend largely. We are trying to achieve that figure of 90.
Okay. Okay. And coming to our FY '21 numbers. So what was the overall sales to the power sector, sir, of the dispatches we did?Of the 573 of dispatch, what would be for power sector because the numbers given that would include the e-auction number specifically for power sector. It would be great if you can give overall for power sector through linkage and through e-auction how much was it in FY '21?
I'll tell you. The marketing guy will give you the figures.
Current financial year till October '21, 291.72. The comparing figure with the previous year, it was 237.75. The growth is 23%.
My final question, you mentioned that the drop in realization in the second quarter in linkage was due to higher supply to power sector because we charge lower. So I missed that percentage. How much we charge lower for power?
It is about 20%. There is a power difference -- price difference of 20%.
So may I know why for power sector alone, it is lower?
It was fixed long back, and it was based on the -- yes, please, that the marketing will explain you.
Gentlemen, basically, power and prices are controlled by so many other things like PPA, government regulations where they have to exercise that caution of not charging or overcharging. Whereas for a product like, say, aluminum or cement, they have -- their end prices are not controlled by anything. They can charge as per their market scenario. So for them, since they are market-driven prices for their end products, so we do charge 20% more. But for power since it is PPA-driven prices, and government also does take care that the prices of power, which is to be utilized by common people or industry does not go on a very high note, it is, like, controlled.
The next question is from the line of Vishal Chandak from Motilal Oswal Financial Services Limited.
My question pertains to your CapEx program. So if you could just highlight where are you in terms of CapEx with respect to the fertilizer plant? And obviously, on the target of 1 billion tonne of coal mining, you had said that you will be spending about INR 40,000 crores INR 50,000 crores over a span of the next 4 to 5 years -- 3 to 4 years. So where are we in that regard, sir, in terms of ordering of equipment, et cetera?
See ordering of equipment, et cetera, I think most of that, means, this is a continuous process. But most of the equipment, there was a lack or there was a shortage of equipment. We have placed the order, like dragline, we placed the order for 6 draglines. We have placed order for the 240-tonne dumpers, shovels, et cetera. It is a continuous process, but whatever was shortage, have been placed, and we have started receiving the equipment. This year, we had planned to invest about INR 17,000 crores. And last year, we have spent something like INR 13,500 crores. This year, we -- till this time, we have spent something like INR 7,000 crores. And I'm quite hopeful that if we not -- we will be achieving our target in this. And most of this money, except for a small component, for fertilizer plants of Talcher, and all those 3 fertilizer plants, which were already committed, rest of the money is being spent completely on coal or coal evacuation structures. And what we had planned that in the next 3, 4 years, we'll be spending more than INR 40,000 crore, INR 50,000 crore. We are completely on course. Most of the projects that we are likely to take off have been fine, and the works have started except for a few exceptions where the contracts that failed like in Konark, where we have gone for retendering. For railway projects also, it is being now monitored by the Railway Minister himself. And so I'm quite hopeful all these projects will now be completed well within the time limit that we have set.
That's very helpful. Sir, in light of the CapEx program that we've already announced and we are working on it, so how soon can we be ready for this 1 billion tonne target?
Now we -- since -- earlier, we were planning for '23 to '24, but that seems to be completely unreasonable. We are targeting for '24 to '25. But it will depend largely on how the demand scenario pans out. We cannot produce coal and keep it. So last year, we produced 576, but we ended the year with a stock of 100 million tonnes. This year, we are thinking that we will be producing something in the range of 640 million tonnes. Let's see how the -- what is the stock position. If the stock position is not good, definitely next year, the production will increase. And -- but 1 billion tonne, we are targeting for '24, '25 depending on the demand in the country.
Sure. Sir, just one last question. In the run-up to the steep hike in the international coal prices, there was a huge opportunity for us to replace the imported coal. So how much of imports have we been able to replace on a YTD basis and in this quarter as well, sir?
There are 3 types of coal we must understand. One is coking coal, that we are not targeting to replace and we cannot replace because that type of coal we don't have. Then certain type of coal is very high-grade coal like cement industry uses, even the pet coke and high [indiscernible] value anthracite, et cetera, that we again don't have. But lower type of coal means G9 to G13 type, we have been able to replace almost 50%, I'm told, about 45% have reduced in the last -- compared to last year. Last year, again, it was -- quite -- last year also that import was less compared to the year before. But this year, we have reduced substantially. Secondly, what has happened because of the high price of the coal in the international market, the power plants located on the coastal areas which are based on very high GCV coals, they have reduced their production of energy substantially. That too, we are supplying from our coal and the domestic coal-based power plants are now generating that energy to fulfill the gap. So to that extent also, something has been replaced.
I think in one of the earlier quarters, you had mentioned that the addressable market for import substitution is close to about 100 million tonnes.
That's right.
Right. No, I completely agree. Sir, I just wanted to understand on a structural basis, how much of that market we have captured as in price arbitrage is 1 factor. Tomorrow if the international prices go down, and definitely, these people will again switch to imports. But on a structural basis, have you been able to move from import -- move towards more towards import substitution?
See, when I say 100 million tonne, that is equivalent to almost 70 million to 80 million tonne of imported coal. Because 100 million tonnes of our coal is slightly inferior bar. We have been able to supply about 60 to 70 million tonnes extra coal this year to replace that. But exact figure, I will request Viswanathan to give it you separately because I don't have the exact figure right now.
The next question is from the line of Pinakin from JPMorgan.
Sir, I have three questions. First, just to get the e-auction issue clarified. So the first half e-auction coal sales were 57 million tonnes. Last year, it was 94 million tonnes. And you basically highlighted full year around 90 million tonnes, which would imply that the second half e-auction coal sales are around 60 million tonnes versus 57 in the first. Is that understanding correct?
Yes, you have understood completely right. If it is 57 million, I don't have that figure, but if you are saying, that must be the figure. 57 million tonnes coal supply has taken place, so 33 million tonnes, I'm saying that provided, but I had put one heavy except power sector should not increase their demand tremendously again as they did it during the October month.
Now just complete e-auction loop. So in the first quarter and second quarter, average e-auction realization premium to FSA realization premium was 13% and 15%, respectively. And this per you right now stands at over 50%, right? Would that be correct?
Yes, that's right more or less.
Understood. Understood. Sir, my second question relates to cost. Now diesel prices have come off very sharply. And historically, there used to be a relationship between diesel and the consumables and other costs. So what would the recent diesel price decline translate in terms of cost impact on coal? And whether we will see this deflation being offset by either higher employee cost or some other cost?
This question, I will request Director of Finance to answer because there is some linkage between the increase in price of -- there are some linkage between increase in price diesel and increase in cost. So that will apply while deflation takes place so he will explain that.
Yes. In fact, Pinakin, as we had earlier also given many times a sort of guidance, that what is the impact based on the total absolute usage of diesel. So both in the contractual and as well as my departmental together. So this time, by INR 18 gradual increase over Q2 to Q2, we had a [indiscernible] of around 600 crores. And going by that 130 crore liters of consumption, it is for INR 1, the thumb rule was -- which stands till now, around INR 130 crores is impacted.
So INR 130 crores impacts per quarter or per month or per year?
Per year.
Per year. Understood. And sir, my last question relates to FSA coal price hike. You were earlier confident of getting an FSA coal price hike early on, but that seems to have meandered away. How do you see the potential hike for FSA coal?
See, I'm quite hopeful that it should happen soon. In October, because of the crisis, everybody was shaky. But let me add one point that coal price increase is not something -- is something where we have to bring all the stakeholders onboard. That process is on. And everybody understands that we have reached to a point where the coal price increase has become inevitable. I'm quite sure that it should come very soon. But when will it come, it's very difficult for me to say. It's not something that we have left it.
The next question is from the line of Rahul Modi from ICICI Securities.
Sir, a very brief couple of questions. Sir, firstly, on the wage negotiation. Sir, I believe we started making some provisions. So if you can help on that account as to what is the kind of cost increases that you were envisaging and for that we are providing on a quarterly basis or an annual basis?
Yes. Rahul, I will also take this question. I'm Samiran Dutta. The question that you have asked is the impact or the provisioning that we are currently making. In this quarter, we have made a provision of around INR 300 crores. You will appreciate that it is still somewhat ad hoc provision. Because unless and until there is some headway into the negotiations, which are in very nascent stage, it is very difficult to understand the impact going forward how much we will be finally taking. And in any case, unless and until the final NCWA agreement takes place, there are certain things which we cannot, in fact, provide which can be provided or liability only booked when only that gets finalized, like the actuarial valuation part of it, which also accounts for almost, say, 25% to 30% of the wage settlement. Now coming to this, as I've mentioned, that we have already taken INR 300 crores, this is in the backdrop that almost 75,000 has already -- personnel has already gone down from the last NCWA. Going by the other organizations also the trend that is taking place, the DA increase is also less. So the impacts are no way similar to what had been in earlier cases. So keeping all these things in mind, we have provided already INR 300 crores in this quarter.
Okay. Sir, any number that you think of -- which is -- can be anywhere between taking a INR 300 crore ad hoc, I believe that will be INR 1,200 crore. But anything -- you believe you can contain it within INR 2,000 crores or INR 1,500 crores, anything like that? Any thoughts?
As I mentioned, actuarial valuation is one area where it is very difficult to, in fact, precalculate or how much will be the other effects -- that has got other effects. And because it's a very high manpower-based company, the actuarial valuation plays a big spoilsport in that respect rather than the actual quantum or the minimum guaranteed benefits that we call. What we are providing as of now is on an understanding of what the minimum guaranteed benefits can accrue or at this stage can be envisaged. So that's how we are looking into it. So giving a firm number will be difficult.
Sure. Can you throw some light on what is the daily -- on an average, what is the daily offtake that we are currently seeing? And what percentage of that is going in for power sector and the balance for non-power?
It is about 1.9 million tonnes is what we are discussing now almost on the average this month. Last year in the last week was slightly higher. And out of that 1.9, 1.65 type is going to power.
So is this better than what we were doing in Q1 and Q2 in terms of non-power?
Non-power is about 3 lakhs. Actually, I will explain. On the average, 1.9 lakhs has gone in this month for -- total this, but the average to power is 1.6. Whenever it goes to 1.965, 1.97 types, then the power goes right up to 1.65, 1.66. So about 3 lakh is going to non-power sector on the average. Any increase in coal dispatch generally goes to power. And I think in Q2, we were dispatching almost same or slightly less than this to the non-power sector. It was 2.5 lakh per day. Now we are doing about 3 lakh.
Okay. Okay. Understood. Helpful. Sir, again, harping on the same point which previous participants that we are bearing the brunt of cost increase in a significant way, whether it is diesel or wage costs, while the other people in the energy value chain are able to pass on cost, it's becoming difficult for us. So any kind of price hike will be a big relief for the investors as a whole. So just to continue that point, so how is the debtor positioned? Is that stabilized? Or is it, again, building up, how do you see it qualitatively?
Our position you are saying or what?
Debtor position...
Overall position is actually the [indiscernible] are decreasing.
Yes, [indiscernible] are decreasing, and you will have to keep in mind, this is on elevated sales amount also. So as a percentage of sales, it has significantly gone down.
It is fine. It's comfortable.
Yes. It has gone down to around 12,000 crores net of provisions that we make for some grade slippage and all. So if you are looking at the balance sheet level figures, so INR 19,000-odd crore rupees were there at the end of March or at the beginning of the financial year, which has now gone down to INR 12,000-odd crores. So almost INR 7,000 crores of decline over INR 90,000.
Okay. Sir, last question from my side. I'll get back in the queue, is on the CapEx on the non-coal-related activities for example, aluminum. And if you can throw some light that are we looking to do any major CapEx from our side? Or it will just be a developmental small token which we would like to do?
As of now, nothing has been spent on all these things except for the solar power generation thing we have procured in -- not procured in the sense that we have won in the auction in -- tender in Gujarat, which is 100 megawatts. For that, we are investing something. Secondly, we are investing which we've already taken a decision on PFL and HURL. Besides that, we have not spent even a single paisa anywhere else except for preparing the [indiscernible]. Whenever we go, we see the viability of the project and anything related to mining is easily doable by Coal India. Beyond that, it will be very cautious move and with the help of partners only.
Okay. And sir, lastly, about the solar manufacturing -- panel module manufacturing, which we had participated in the PLI. Any progress on the same? And any technology partners you're looking at?
We had issued RFQ. We are issuing the RFP. And if we get the response, then only we will think of participating. But again, as I mentioned, in that, our partnership will be a minority partnership. It will not be a majority partnership. So it will be helping something getting into the country rather than actually running the factory.
The next question is from the line of Prashanth KP Kota from Dolat Capital.
Sir, I have two questions. The first one is on the exports. Sir, is there a potential to do any exports from India for a company like Coal India? And this I asked last year also, but now it's maybe a little bit more relevant given the higher international prices. Is there some opportunity that we can tap in?
There is an opportunity only to the market which are located nearby like Bangladesh, Nepal, Bhutan, et cetera. Otherwise, the general market trend and the quality of the coal in India, in that situation, it becomes very difficult to go beyond Bangladesh or anywhere.
Okay, sir, understood. Sir. And my second question is more of a structural question. You see, the incremental ROC that the company makes is negative. That is, if you are generators, INR 25,000 crores, INR 30,000 crores of EBITDA, you are spending INR 12,000 crores of EBITDA -- INR 12,000 crores on CapEx, INR 12 or INR 10 crores or INR 9 crores each year. And then that's not adding to incremental EBITDA. So we are doing a large CapEx, and out of that, we are producing some volumes -- incremental volume. And a large part of that is going to power sector at very low -- at significantly low prices. Hence the significant CapEx that we are doing each year, significant is very large CapEx as a percentage of EBITDA is not adding to EBITDA. Hence, incremental ROC is negative. Hence, over the last 10 years, we see a decline in stock price. Yes, there is dividends paid out, adjusted for that also, you have not done great. Sir, and in the past, you've indicated that when you decide on FSA price hike, et cetera, you -- the broad thumb rule you have is to maintain 30% EBITDA margin. Sir, when you're -- just one request or wanted to know your thought process, while doing this EBITDA margin, 30% calculation, please reduce INR 7,000 crores, INR 8,000 crores further from the EBITDA because that is going to CapEx, and that's not yielding incremental profit. So assuming that EBITDA is not INR 30,000 crores, just INR 22,000 crores right now. And based on that, please, if you could set the FSA price prices, new FSA prices. Otherwise, we'll continue to be incremental ROC negative on incremental capital that we are deploying. Just wanted to know your thoughts on -- and how do you think about this?
See, if you see the Coal India's expenditure or CapEx, except for the last year, it has been in the range of INR 6,000 crores to INR 7,000 crores. For such a large company, that INR 6,000 to INR 7,000 is actually a very low investment. Last year, we invested something like INR 13,000 crores. And this year, we are expecting something like INR 17,000 crores. This CapEx getting the same amount of ROC without increasing the price is something not possible because our CapEx is not something like additional capacity generation in the sense that it's not a factory where if you do additional CapEx, that means you will generate another line of production. It is continuous -- our CapEx is to get the land and to rehabilitate the people continuously and even to maintain the same level of production, we need a huge investment. And whatever we were doing till now was to that only and without investing substantially on evacuation and production. This is for the first time that last year, we tried to increase investment in production as well as this and evacuation like we have taken FMC projects. And then rail lines also, we are trying to complete like Dharamjaygarh -- Gharghoda-Kharsia line has been -- Dharamjaygarh-Kharsia line has been completed to a large extent. We are trying to double the Sardega-Jharsuguda line. All these things we are taking up and FMC projects we have taken up very seriously. Unless we do these investments, even maintaining the EBITDA will not be possible and the coal production will go down. So even to -- in coal industry, even to maintain a certain level of production, you have to keep on doing extra investments. That should be understood.
Just to follow up on this, completely agree with you and appreciate the actual underground issues that you have raised. The limited point we're trying to make is many large investors also have been patient since several years. Is that the -- coal -- excessive coal prices, how you're taking into account this dynamic that the CapEx is -- incremental CapEx is required to even maintain the current level of production. So what are you saying is instead of...
I completely agree with you while fixing the FSA prices, I will definitely try to fix it keeping all these things in mind. We would like to have a good -- because for the last 4 to 5 years, we have not increased the price. And this is -- we have reached to a level which I'm telling them this is not even commercially viable to do the production. So everybody has understood that, but then it is taking a while. I'm quite -- I'm quite sure that a proper decision will be taken soon.
[Operator Instructions] The next question is from the line of Noel from Ashika Group.
Actually, sir, I just wanted to get a small idea. So in the presentation, it is mentioned that there are some rail links which are being commissioned at the end of FY '22, '23 and '24, 3 separate projects. So I just wanted to get an idea of what kind of cost benefits we can see in the FY '23 and onwards on a project-wise basis? Can we get that breakdown?
Whether we get the breakeven in these projects or not, that is not very critical. I won't be able to say right now because I will have to identify which are the projects which are like -- okay, I will try to answer this question differently. Tori-Shivpur line, if it is double and whenever it is completed, we will get a huge breakeven. And right from the day 1, there is no shortage of coal and actually many new mines of private sector are also coming. So there will be a huge offtake from that area, and there will not be any problems. Similarly, Sardega-Jharsuguda line. Again, there is -- even our Siarmal is coming on that line if that line -- and Barpali -- if those projects -- this project is completed and production from those mines will start, then there will not be any problem of getting breakeven because whatever -- not only we are getting in 2 ways. First thing is whatever Railways give me one thing, crores of revenue. And secondly, it helps me in increasing the production also. Suppose we the mine Garjanbahal today is producing something like 25 to 26 million tonnes, and we are projecting that in another 2 to 3 years, it will start producing something like 40 million tonnes. And that's the same vicinity Siarmal is there, which is expected to produce 40 million tonnes. If these 2 mines have to produce and if this whole has to be evacuated, then without that line, we cannot do it. So finding the breakeven of line alone, although that line will give me a breakeven right from the day in first year, if I get this type of traffic. But finding that breakeven will not be very right way of looking at it because without that line, I cannot produce coal and all that investment we are doing and mines will go waste. So the viability of the project should be seen in a more comprehensive and composite rate. This mine plus line both investments, we should see whether we are getting from yield or not. That should be the right way. Because we cannot transport that much of coal through road, that is an impossibility.
Okay. Okay. Okay. Thank you for clarity on that particular point. Yes. Apart from that, then I just wanted to get an idea. So right now, what is the -- I mean I didn't exactly hear this. What exactly is our production aim for FY '22 and '23?
'22, '23, we are thinking of something like 700 to 710 million tonnes, depending on the demand scenario.
Okay. Okay. Okay. This is for the current financial year -- sorry, this is next financial year, right?
This is for next financial year.
And just to confirm, so this current financial year, we are aiming for e-auction sales to be roughly flat year-on-year, right, compared to FY '20?
Yes, that's right.
The next question is from the line of Pulkit Patni from Goldman Sachs.
Sir, you mentioned about the effort that we put in terms of taking FSA realization higher. Now just keeping in context with what's happening in the power sector right now with power companies still not getting paid for their dues, do you really see that we have an opportunity to take any meaningful price increase in FSA? And how realistic is it for us to be able to do so? And would it be fair to assume that the price increase in FSA market would be good enough to make sure that whatever wage bill increase, et cetera. we see, increase in contractual labor costs, et cetera, it's good enough just to match that? Or do you think this is going to likely contribute to higher EBITDA margins? Those would be my questions.
What will happen, I am not very sure of that. But my -- this is that in the last 4 years, we have not increased the price. So whatever price we are going to increase should definitely be adequate to give me the right EBITDA that this factor expects. Increase in contractual labor -- contractual price, et cetera, that have been there. But with the decrease in the diesel price, perhaps that will not go as high as I was expecting about a month back or so. Similarly, labor cost this year is not likely to -- labor cost increase is not likely to be very high because in general, except for few provisioning that we have had to make because of certain reasons, otherwise, cost of labor has remained constant last year also and this year also, it has remained almost constant because of the high rate of retirement, attrition, et cetera, mainly retirement. And because of that, the labor cost is not increasing. But you are right, with the wage negotiation, the prices -- the cost will increase. And increase in other factors like general increase in the market price in -- general inflation, et cetera, that is affecting our margin. But whatever increase we are looking at is definitely much higher than compensating these increases.
The next question is from the line of Amit Bhatt from Mit engineers.
Can you please quantify overdue outstanding from discom till date sir?
Discoms, we don't have overdue. We generally supply to only gencos.
Genco, yes. Sorry.
Gencos, the receivables is about -- net receivables is INR 12,000 crores right now at the end of October. I don't know what is it at this point of time, but at the end of October, it was INR 12,000 crores.
And sir, is there any concern regarding increase in the outstanding again because of the emergency-like situation, because you have to supply and -- even if there is no pay...
One must understand why the receivables increased. It increased during the pandemic because electricity was being supplied, but they were not getting paid at all. The receivables at the hand of discoms -- means the amount that discoms were receiving from general -- except for industry sector, which also was switched off, the rest of the sector was -- it was -- it was just nothing compared to what they used to. Because of that, it increased. And after first or second quarter, we tried to control it. And from this year, first quarter onwards, we have been trying to control the receivables from the genco and we have reduced it to 12,000. If something like pandemic again happens and everything is shut down, one cannot say. But because there is a shortage of coal or shortage of something, these receivables will not increase because we use this opportunity -- this as an opportunity also to get money because there's demand from many people, and we say that we will give coal on priority to that person who is paying us upfront. So that has helped us to reduce the price -- to reduce the receivables. And in the future, it will go down further.
Sir, you have done a great job by recovering these over dues in last quarter. But sir, now as you explained that we can take advantage of the situation in this one particular manner that we can recover faster. So can you please give us a guidance that when we are going to get the reasonable amount of outstanding at the end of the year?
It will be very difficult to -- for me to give the time line. But in general, now we are following a policy in which we say that whatever money you are giving, 1/3 will be adjusted against the past receivables, and 2/3 will be the supply -- for 2/3, the coal will be supplied. So that has helped. It is very difficult to enforce it at every level and to each customer. But then this is the general policy, and this has helped us in this reducing the receivables significantly.
And sir, this outstanding can affect the CapEx or a dividend?
No, no. We have still the liquidity of about INR 27,000 crores -- INR 30,000 crores.
The next question is from the line of Bharanidhar Vijayakumar from Spark Capital.
Sir, can you give what is our expectation of dispatches for entire FY '22?
I think it should be in the range of 670 million tonnes to 630 million tonnes.
Okay. And for FY '23?
It will be very difficult. But if the demand is there, we should reach something like 700 type. But then it will depend on production next year because this year, we had an advantage of having huge stocks. But next year, that will not be there.
Okay, okay. And there is some news floating that the FSA linkage price can be hiked by 10%. So is there any such number you have in mind?
Everybody is free to guess something. It will -- it has not been finalized as yet.
Right. And regarding the wage negotiations, so it would be primarily for the non-executive cadre, if I'm not wrong, correct?
It will be non-executive cadre, but it will affect the contractual labor also. Because contractual labor, the daily wages are dependent on the minimum of what we give to our labor. So it will affect there also.
Okay. Because the last big hike in the wage costs happened in FY '18, if I'm not wrong. So provisioning there was a big number, close to INR 10,000 crores. So any number we can expect in FY '22 or '23 in terms of how much can the employee costs go up?
Difficult to say, very difficult to say, to give any number.
I will tell. I would like to add 1 thing only in this regard. Without going to numbers, you see in the FY '18 that you mentioned, that has had a double effect of increase in gratuity to INR 20 lakhs also. And that was a massive one. Almost 50% of the entire effect was due to gratuity. In fact, more than that for -- including all actuarial valuations. So this time around, there is no such expectation.
Sure, sure. And you mentioned we consume about 130 crore liters of diesel per year, correct?
This is what the Director of Finance told, yes.
The next question is from the line of Amit Dixit from Edelweiss.
Yes. On receivable front, while if you go subsidiary-wise, you will see that MCL are better off, while if you look at ECL and BCCL, particularly, I mean, there receivables are pretty stagnant. So I just wanted to get an idea of where the receivables are stuck? And whether we would be able to reduce receivables of these subsidiaries as well? And will Coal India go to the number -- historical number that we used to have by end of the year of around INR 8,000 crores odd by end of this financial year?
You see, Amit, answering your question, I think you have -- must have seen some old figures. As far as even those subsidiaries that you mentioned, ECL and BCCL, particularly BCCL has run up to almost INR 3,800 crores at one point of time in the last financial year. And that has now got reduced almost to half, less than even half. So there the liquidation is taking place, but you'll have to also appreciate that the customers who are there for BCCL and ECL, there are certain customers who are -- have been paying less in the past. But now that they have also increased their dilution, so this is going to go down further, and it has gone down heavily in BCCL and ECL also. There's no expectation. Maybe some rate difference is there of liquidation.
Okay. That's very heartening. The second question is on expected dividend since we have already -- there is a Board meeting planned for the first interim dividend. And given that FY '21 was the calendar year, but still kudos to you that you gained dividend, which was higher compared FY '20. And this year, we have seen significant cash accretion. Our cash balance is possibly one of the highest that I have seen in last several quarters. So can investors expect dividend for the year to be higher than FY '21?
Without forecasting I would only like to say what you have mentioned already that the receivables have gone down, the cash position has been better, although H1 to H1 basis, the profits have been flat. Q2, Q2 is flat and H1 basis, it has been slightly lower. So -- and this is only the interim one. So we will be discussing that in the Board meeting. So this is the -- so we'll discuss this in the Board, and we'll definitely see. But 1 of the 2 constraints that we have in deciding what would be the distribution is that profits per se in those subsidiaries which pay a dividend that has been -- this is not on the overall Coal India basis. Number 2 is also the cash position. Now cash position, as you have already mentioned, that has bettered and profits are also being maintained by those major subsidiaries. So let's see how much comes at the discussion.
Great. That's helpful The third question, if I can squeeze one more, is the database question. What was the overburden removal in this quarter? And what was the -- of course, overburden issue I will calculate. If you can give me the overburden removal?
Overburden removal during this quarter, you mean?
Yes, this quarter.
This quarter, it was close to 71.03 million cubic meter with the last quarter.
The next question is from the line of Gokul, an individual investor.
So my first question is on the quality of the different types of coals. So is it because India is lacking the quality coal throughout the country? Or is it because we haven't been able to explore? Or is it due to lack of viability of the mines?
In general, Indian coal is of poor quality, except in a few pockets like in ECL and in CIC field of SECL. Our coal quality is poor. It's not that we are not exploring it or we are looking at -- viability issue will have to be seen if it is a very deep-seated coal, then perhaps it will not be viable to take it out. But in general, the Indian coal quality is poor. And it is not that we are unable to exploit it just because of any other factor.
Okay. And also, is it possible to like expand the exploration to other minerals in the lands you already have? Or is it also not viable to consider other opportunities in other minerals?
We have been thinking about finding some other minerals in this area, but where the coal fields are there, we have not found any other minerals, which is very useful -- which can be very usefully extracted. But this is a question which I don't have much of clarity. I have not come across any other minerals which can be extracted from this area.
Bauxite is there in Jharkhand nearby but...
Bauxite mines are different mines. That is a completely different area. For coal mine -- like bauxite mines are there in Orissa as well. Orissa mines are very good bauxite mines, but those are in a different -- completely different area from our areas of operation.
Multi-mineral things are not there?
Multi mineral things are not there to my knowledge.
Okay. And finally, also regarding the noncoal sector. So from last con call, we have been saying that we have incorporated the subsidies and subsidiaries, but we lacked the aggressiveness in pursuing this. So is it because we don't want to spend too much capital? Or is it the intention of the management is not to follow the non-subsidiary -- the other sectors very aggressively? Is it like looking at the long term because there's a lot of opportunities? And we do have a lot of cash, if we can decrease the dividend policy a bit and instead of paying out lots of dividends, we could use the capital more widely into other sectors. So what would be your thoughts on that?
See, the thing is, for coal -- solar power generation, we are looking very aggressively. But because of certain regions, we could not succeed in many of these auctions that we participated, maybe because we were slightly conservative or maybe because we were not very sure of the policies that have developed in the last 2, 3 quarter. But we have been bidding for almost everywhere, but we have not succeeded. Perhaps we need to be slightly aggressive in that. In PLI, you have seen, the PLI, we did participate. We -- now it seems that we will get PLI. But right from the very beginning, we were saying that this is not an area in which CIL is looking for a majority partnership, and we are looking just for minority partnership. And we are in search of a partner. We hope that we'll get and then it will take a while before it. But CIL tried to enter that field only when not many people were eager. Now since many people are eager to participate, I don't know how much viability will come and then we'll see how to go further. Aluminum sector, we are working very hard on that. We are in negotiation with Odisha government. But again, one has to move slightly consciously and all these things are time taking, the mines, getting the area, et cetera, takes time. So it will take a while. It's not that we are not interested, but we are interested only if there is a viability in all these projects.
The next question is from the line of Saket Kapoor from Kapoor & Company.
Kamlesh, can we close this con call after this call?
Yes, sir.
Sir, a couple of -- yes, yes. I will be very brief, sir. Firstly, sir, if you could give on the CapEx part, how much has been the CapEx spend on the new mine and how much is on the existing infrastructure, especially on the evacuation partner? And also on the report on the ESG front, where are we in midst of releasing the ESG? And also on the closure of the nonviable mine? And sir, lastly, on the...
You asked 3, 4 questions. Taking ESG mine first -- ESG report first. We have published the ESG report, and it has been uploaded about 4, 5 days back -- about 15 just before 15th of October or so it was uploaded. The second thing you asked about the closure of the mines. We had identified 23 mines; after that 12, 13 have been closed. And 4, 5 mines, I had said that either these mines will take up the projects in which we will increase the production and make -- try to reduce the losses. So 4 or 5 months of ECL and 1 mine or SECL, we have identified where the production can be increased. And 1 mine of SECL actually was in advance where we are introducing this continuous miner. And SECL -- in ECL we are trying to merge this mine so that the production can increase. So we are making all efforts to reduce the losses in there. And we have some -- whether by closing the mines we are saving money or by upgrading the mine we are saving money, we work on that. If there is by upgrading the mine, slightly we reduced the losses slightly higher, then in that case, we are going for that. So that increases -- because most of these underground mines have better coal also, which is in huge demand. The third question that you asked about the CapEx. I won't be right now able to give you the figure how much we have invested in mines -- sorry, new mines and in railway infrastructure -- evacuation infrastructure. But in general, about 30% of our total investment goes for acquiring land and rehabilitating people. And rest of the things are in different this. But I'll request Mr. Viswanathan to give those figures to you separately.
Right, sir. And sir, lastly, about the dividend part also, sir. You spoke about this earlier that since we are receiving dividend from the subsidiaries, so the tax incident part comes into play. So on taking dividend and buybacks, which one works out better tax efficient, sir? And on the aluminum and the solar part also, sir, you were telling that we are looking at envisaging to develop -- to look into the aluminum sector. On one hand, the government itself is looking to divest National Aluminum if my understanding is correct. So we're deliberating on a new venture altogether, whether the gestation period is also high. And on one side, the government coming up with disinvestment of an existing well-established player. So where is this delink? Why Coal India pursuing it separately when the baby is itself on the block, if my understanding is correct? And our investment in the solar sector, where are we -- how much CapEx are we doing for this year, sir?
See, it will be better if you ask 1 question at a time.
I'll do that. Firstly on the dividend and the buyback tax incidence arbitrage part, if you could explain.
Yes. I'll request Samiran to help me.
You see in the buyback, in fact, because of that 115 QA which was newly introduced in the last taxes, Income Tax Act. So thereby, you are getting the unlisted companies also when they are buybacks -- they are making buybacks. Previously, it was only the listed companies when making the buybacks, they were exempt from the taxes, but they are no more in the case of unlisted also. So it becomes a double taxation in the hands of the -- my subsidiaries, which are unlisted as well as when Coal India pays out of those proceeds received from them, which has already been once taxed are also getting taxed. So that's why in the same transaction or the amount of proceeds that we pay for buyback is double taxed. But in dividend, when -- while the -- when we receive the dividend, we give tax, it is exempted by way of a section called 80M that if we are paying out of the subsidiary's money, then it is not double taxed, it is taxed only once. So that way, in the same proceeds, if you are making buyback, it is getting doubly taxed, then ultimately, these shareholders are getting less. But through dividend route, they are getting one tax less, so that's how it actually works.
Sir, since this is an [indiscernible] money, and the budget is near the corner, the presentation should be made from companies having huge cash balances like our and other PSU also to correct the stage for the benefit of the minority shareholders. Just a small data point, September 2019, the investor base was 6 lakhs. And today, the investor minority shareholders base is above a 1 million. So there has been a tremendous increase in the number of investors over a period of 2 years. And the stock price have also not performed. And on the basis of these tax anomalies, even companies eager to distribute cash are unable to do so. So if the presentation could be made to the finance department before this budget and getting this corrected.
The budget has been already highlighted in appropriate places. So let's wait and see.
Yes, sir. And also on the aluminum part and the solar, if you could give more clarity when National Aluminum is one of the company which is on the divestment...
The question that I had, you had mentioned that aluminum -- one aluminum company getting disinvested. So that's not -- that's only a process of one listing and for value unlocking. So that doesn't mean there cannot be other players in the fields, particularly, I suppose, hypothetically, also Coal India has a larger cash base and more EBITDA or the margins maybe from other players. So that's all -- there are always opportunities to be worked out. So that way also Coal India was looking into it. But although as has been already mentioned, nothing serious has already gone into that.
And on the solar front, sir, how much -- what has been the CapEx for the first half and...
Solar, we have -- we are doing on the 2 fronts. One is calling our own solar power plants for own consumption and bidding for others. In our own consumption, we have tendered out about 175 megawatts of this, and some of the tenders have been finalized. Somewhere -- in some cases, we have got very high price. I wouldn't be able to tell you how much we have finalized, but about 175 megawatts in pipeline from for our own consumption, which we are installing on areas that -- spaces that we have in our coal field area. And secondly, we have got this 100-megawatt in Gujarat, which we are likely to complete before next April. So about INR 450 crores will be invested in that. So that way, I'm looking at about INR 1,000 crores investment this year in solar thing.
On the ESG front, sir, what has been the feedback from the investing community? And you articulated to the investors that things would look different when the -- when you will be explaining how wrongly perception has been on the ESG front for Coal India in particular. So what is the thought process? And what is the feedback after the ESG report has been published?
I think the feedback has been good. And in general, people are understanding that Coal India is not neglecting ESG thing. See, last year, we did plantation over about 830, 840 hectares. This year, we have increased to 1,360 hectares. We are trying to -- and this is an increase of almost 50% in a single year, which never happened in the history of Coal India. Then we are doing whatever -- overburdened dumps, et cetera, are there, we are trying to stabilize them in a big way by developing grasslands over there. So that will improve the environment around in which we are working. Then we are investing in long ways in the FMC projects, which we have requested maybe to do the study and they have come up that it reduces the particle burden or dust burden by about 80% to 90% in our areas of operation. So we are going a big way in this. But all these things take a while before the impacts become quite obvious to the public because they don't read the report, and they don't believe it many a times. They believe what they see. Now they are saying that the trucks are flying on the roads and that is generating a lot of dust. Once that stops, it will differently go in a very big way -- positive way. But we are in direct communication with investors on a regular basis. And I think slowly they will understand that in our areas of operation, Coal India is a very important economic activity -- is performing a very important economic activity. And in those remote and poor areas, whatever we are doing is quite beneficial to the society at large.
I hope a lot of feedback has come from investing community that would be looked into and addressed at an appropriate forum so that investors' value can be created over a period of time.
Thank you. Can we close, Kamlesh, now? Hello?
Yes.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Kamlesh Bagmar for closing comments.
Yes. Thank you, Mr. Agrawal and your entire team for your valuable time and great effort which has been put up on the detailed presentation and answering the calls -- answering the questions. And any closing remarks, which you have, sir?
Closing remarks, thanks a lot for attending this con call and trying to get our point of view on all the issues. My only remark I can make and the last that coal is not going to -- the journey of coal is not going to end soon. Coal will continue as an important supply -- fuel source for energy at least for a decade or a decade and a half. There is no way we can wish away coal. Thank you very much.
Thank you. On behalf of Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.