Publication - August 14, 2013
Coal India Ltd's shareholder value is threatened by poor corporate governance, faulty reserve estimations, regulatory risk and macro-economic issues.
Coal India Limited is the world’s largest coal miner, with a production of 435 million metric tons (MT) in 2011-2012. There is significant pressure on CIL to deliver annual production growth rates in excess of 7%. The company has a 2017 production target of 615 MT.
Coal India's track record raises questions over its ability to deliver this rate of growth. In addition, serious governance issues are likely to impact CIL's financial performance. These pose a financial and reputational risk to CIL, its shareholders and lenders, while macro-economic issues in the Indian energy economy pose a long term threat to Coal India.
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