Coal India Limited (CIL) as an organized state owned coal mining corporate came into being in November 1975

with the government taking over private coal mines. With a modest production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world. Operating through 81 mining areas CIL is an apex body with 7 wholly owned coal producing subsidiaries and 1 mine planning and Consultancy Company spread over 8 provincial states of India.

PERFORMANCE HIGHLIGHTS 2010-2011

Coal India recently announced its 37th Annual report. This financial year has been very good for the company especially in the light of its debut on the bourses on 4th November, 2010 on both NSE and BSE. Its IPO garnered about Rs. 15,200 crores by selling only 10% of its equity. CIL is currently the second largest company in terms of market capitalisation.

CAPITAL STRUCTURE The authorized share capital of the company as on 31.03.2011 was Rs.8904.18 crores, distributed between Equity and Non-cumulative redeemable preference shares as under: y y 90,41,800 Non-cumulative 10% redeemable Preference Shares of Rs. 1000/- each (Previous Year 90,41,800 Non-cumulative 10% Redeemable Preference Shares of Rs. 1000/- each) 800,00,00,000 Equity Shares of Rs.10/- each (Previous Year 800,00,00,000 Equity Shares of Rs.10/- each)

Total Employed Capital: Rs.8904.18 crores

Dividend Pay Out Directors recommended dividend payment of Rs.2463.38 crores@ Rs.3.90 (approx) per share on Equity Shares of Rs.10/- each fully paid valued at Rs.6316.36 crores. Out of total dividend, Govt of India gets Rs.2217.04 crores and other investors get Rs.246.34 crores.

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PROJECTS Presently there are 117 mining and 13 non-mining projects, costing Rs.20 crores & above, under different stages of implementation. Out of117 mining projects, 76 are on schedule&41 are delayed. Out of13 non-mining projects, 10are on schedule, 3 are delayed. Six coal projects, each costing Rs.20 crores & above, with ultimate capacity of 13.65 Mty and sanctioned capital of Rs.314.18 Crs. were completed during 2010-11. Another eight coal projects, each costing Rs.20 crores & above, with an ultimate capacity of 15.88 Mty and sanctioned capital of Rs.956.81 Crs. had started contributing production during the year 2010-11. CAPITAL EXPENDITURE Overall Capital Expenditure during 2010-11 was Rs. 2539.72 crores as against Rs. 2809.99 crores in the previous year. RAW COAL PRODUCTION Coal dominates the energy mix in India contributing over 50% of total primary energy production. Out of this in fiscal 2011 81.1% was accounted from Coal India with a raw coal production of 431.32 million tonnes as against 431.26 million tonnes produced in 2009-2010. Growth in coal production was marginal because of environmental factors. STOCKS Net adjusted value of the pithead stock of coal and other products at the close of the year 2010-11 after provision for stock deterioration etc. was Rs.4439.82 crores, which was equivalent to 1.06 month value of net sales. SALES DUE Net Coal Sales dues outstanding as on 31.03.2011 after providing of Rs. 1484.52 crores (previous year Rs. 1453.75 crores) for bad and doubtful debts, was Rs. 2979.83 crores (previous year Rs. 2110.42 crores) which is equivalent to 0.60 months combined gross sales of CIL. TAXES During the year 2010-11, CIL and its Subsidiaries paid/adjusted Rs. 9923.27 crores (previous year Rs. 7499.94 crores) towards Royalty, Cess, Sales Tax and other levies. Also, on 11th April 2011 Government of India conferred MAHARATNA STATUS to Coal India Ltd. The 5th PSU to be in this category, this means greater financial autonomy for the company to expand domestically and globally.

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Balance Sheet (Consolidated) As on 31st March 2011

------------------ In Rs. Cr. -------------------

Particulars

Mar'11
12 Months 6,316.36 13,121.02 19,437.39 0 1,370.43 20,807.82

Mar'10
12 Months 6,316.36 10,744.36 17,060.72 0 1,464.30 18,525.02

Sources of Funds
Share Capital Reserves & Surplus Net Worth Secured Loans Unsecured Loans TOTAL LIABILITIES

Application of funds
Fixed Assets Gross Block (-) Acc. Depreciation Net Block Capital Work in Progress Investments Current Assets , Loans & Advances Inventories Sundry Debtors Cash And Bank Loans And Advances Total Current Assets Less: Current Liabilities & Provisions Current Liabilities Provisions NET CURRENT ASSETS Misc. Expenses TOTAL ASSETS (A+B+C+D+E) 387.46 289.13 98.33 55.67 6,319.17 376.63 283.23 93.4 17.84 6,316.57

35.7 0 11,659.52 9,484.74 21,179.95

26.59 0 9,133.36 8,380.19 17,540.14

5,837.37 1,007.95 6,845.31 14,334.64 0 20,807.82

4,763.78 679.14 5,442.93 12,097.21 0 18,525.02

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Profit and Loss Account (Consolidated) For the year ended 31st March, 2011
------------------ In Rs. Cr. -------------------

Particulars

Mar'11 12 Months

Mar'10 12 Months 449.21 1.07 448.14 3850.73 4,749.15 35.6 -0.6 240.91 108.21 109.2 0 0 493.31 -45.17 4,255.84 8.99 0 4,246.85 386.46 3,860.39 200 3,660.39 4.87 114.65 0 3,779.92

INCOME:
Sales Turnover Excise Duty NET SALES Other Income TOTAL INCOME 468.81 7.5 461.31 4596.57 5,534.19 8.62 0.03 237.71 136.06 167.5 0 0 549.91 -88.6 4,984.27 5.57 0 4,978.70 222.89 4,755.81 190 4,565.81 1.87 165.72 -9.84 4,723.56

EXPENDITURE:
Manufacturing Expenses Material Consumed Personal Expenses Selling Expenses Administrative Expenses Expenses Capitalised Provisions Made TOTAL EXPENDITURE Operating Profit PBDIT Depreciation Other Write-offs PBIT Interest PBT Taxes Profit and Loss for the Year Non Recurring Items Other Non-Cash Adjustments Other Adjustments REPORTED PAT

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Analysis of the Financial Report Key Ratios

1. Current RatioThis ratio helps in finding out the liquidity position of the company. Current ratio indicates the firm s ability to pay its current liabilities.

CR =Current Asset/ Current Liabilities

y y

For the year 2011 = 21,179.95/ 6845.31= 3.09:1 For the year 2010 = 18,525.02/5,442.93= 3.4:1

Comment- Standard of liquidity for a firm of 2: 1 is considered to be satisfactory. More

than 2: 1 indicates sound solvency position. Less than 2: 1 indicates inadequate working capital. As the current ratio measures the ability of the firm to meet its current obligations, a current ratio of 3.09:1 implies that the firm has current assets which are 3.09 times the current liabilities. A current ratio of 3.09 is considered to be very healthy.

2. Liquid/Quick RatioLiquid Assets means all current assets except stock and pre-paid expenses. The quick ratio is more stringent measure of liquidity because inventories are excluded from the ratio. It gives the abilities of the firm to pay its liabilities without relying on the sale and recovery of its inventories.

QR= Liquid or Quick Asset/Current Liabilities

  For the year 2011= 11659.52/6845.31= 1.7:1 For the year 2010= 9,133.36/ 5,442.93= 1.68:1

Comment- From the ratio, we can make out that the company can pay its Current
liabilities within 6 months. Quick ratio of 1: 1 is considered satisfactory, more than 1: 1 indicates sound financial position, and less than 1: 1 indicates financial difficulties. (NoteAs the amount receivable from the debtors is very less (= 29000/-), hence it has been neglected in the above calculation.)

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2. Turnover to Fixed AssetThis ratio shows how efficient the management is utilising the fixed asset.

TFA= Sales/ Fixed Assets

For the year 2011= 468.81/ 98.33= 4.77 For the year 2010= 449.21/93.40 = 4.81

 

Comment- This shows that the management is utilising its fixed asset very efficiently.

3. Debtors Turnover RatioThis helps us to find out in how many days the company can recover its money from the customers. For this purpose average collection period needs to be calculated and for this let us calculate the per day credit sales.

Per day Credit Sales = Sales/ Number of days in a year

  For the year 2011= 468.81/365= 1.28 For the year 2010= 449.21/365= 1.23

Average Collection Period= Closing Debtors/ per day Credit Sales

Since the amount receivable from the debtors is very less as compared to the per day credit sales, therefore this ratio is insignificant in this case.

4. Return on Capital Employed RCE= (PBIT/Capital employed)*100

Capital Employed = Share Capital+ Reserves& Surplus + Long term loans   For the year 2011= 4,978.70/20807.81 = 23.92% For the year 2010= 4,246.85/18,525.02= 22.92%

Comment- Therefore, the company is getting a fair amount of return on capital

employed by means of other income.
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5. Return on net worthThis ratio signifies the amount of profit generated from the shareholder s fund.

RNW= (PAT/Net worth)*100

Net worth= Share Capital+ Profit & Loss account+ General reserves   For the year 2011= 4,723.56/19,437.39 = 24.30% For the year 2010= 3,779.92/17060.72 = 22.16%

Comment- From the above figure we could make out that the shareholder s fund is
generating good amount of profit. This percentage has increased by more than 2% from the previous year.

6. Earnings per share (EPS)

This is the most important ratio for shareholders. Investors are more interested in EPS

EPS= (PAT- Preference dividend)/ Number of Equity Shares

Number of shares= Share Capital/ Face value y For the year 2011

Number of Shares= 6, 3163600000/10= 6316360000 EPS = (47235600000-0)/ 6316360000= Rs 7.48 y For the year 2010

Number of Shares= 6, 3163600000/10= 6316360000 EPS = (37799200000-0)/ 6316360000= Rs 5.98

Comment- It is evident that the earnings per share have increased by Rs 1.50. This is
good news for the investors.

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7. Book Value per shareThis is an indicator of strong performance of the company and its financial strength. In case of unlisted companies and private companies this is an important parameter for mergers and acquisition. If book value increases but value of shares decreases then is better to buy shares.

(Capital+ Reserves and surplus)/ Number of equity shares

y y

For the year 2011= 19, 4373900000/6316360000= Rs 30.77 For the year 2011= 17, 0607200000/6316360000= Rs 27.01

Comment- As the company recommended a dividend of Rs 3.97 which is a marginal

increase from the previous year of Rs 3.50 but book value per share has increased considerably by Rs 3.76. This is because of an increase in the reserves & surplus which shows that the company is distributing a moderate amount of dividend but is keeping a greater share of profit in reserves & surplus which shows that company has some investment plans.

Discussion on Balance Sheet

1. Reserves & Surplus It has increased by 22% which shows a strong position of the company. It implies that the company has a policy of growing in long terms rather than distributing early dividends. Increase is mainly attributed to increase in the profit from other income which is almost 25%. General reserves have also gone up significantly. 2. Unsecured Loans- It has reduced by little less than 100 crores. 3. Fixed Assets- Fixed assets have increased on account of land on lease holdings & company have also bought machinery, furniture & fittings, office equipment. 4. Capital work in Progress- Capital work is in progress worth Rs 37 crores have been made on. 5. Net Current assets It has increased on account of increase in inventories & cash at bank & as a result total assets have also increased by more than 2000 crores. 6. Net Block- An increase in Net Block implies purchase of assets of fixed nature and that the company is expanding

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7. Investment- A slight increase in Investments is an indicator of no massive investments being undertaken. But as the reserves and surplus have increased to a large extent, hence it can be inferred that the company may have plans to invest in future. 8. Inventories- An increase of inventories is suggestive of the fact that the company s stock employed is not rolling out at a favourable rate. The cash is blocked and the costs associated with inventory are not under control. 9. Sundry Debtors- The amount recoverable from the debtors is very less which shows that the credit sales have been recovered. 10. Loans and Advances- The net increase in Loans and advances shows that Coal India has a considerable amount of money is pending with suppliers, contractors, short term loans to body corporate, loans to subsidiaries and advance tax. (as per Schedule J of Balance Sheet) 11. Current Liabilities- It has increased by more than 22% mainly due to Sundry creditors, and Fund from subsidiaries (as per schedule K of Balance Sheet). But it is not a matter of concern as the firm has sufficient amount of Reserves and Surplus.

Discussion on P&L Account1. Sources of Income- Major Source of income is from the interim dividend / dividend coming from the subsidiaries, guarantee fee from subsidiaries & interests / dividend from deposits in banks & advances. 2. Operating Profit/loss- Company is having an operational loss of 88 crores because of the day to day expenses like Material Consumed, Personal Expenses & Selling Expenses exceeds the sales turnover. 3. Profit after Tax- PAT has increased by 25% because of increase in the income from other sources.

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