In 2014, India was the largest importer of Coal in the world. Production inefficiency, unavailability of rakes, etc lowered the levels of production significantly.
Its just been 2 years, and today, India is looking to export coal - a transformation that has dramatically shaken up the coal industry.
Over 40% of the costs of Coal India go towards Man power, but with the retirement of a large portion of its workforce over the last 3 years, and the fact that these workers were replaced by younger, lower salary workers, plus a lot of mechanization means that productivity per worker for Coal India is expected to DOUBLE within the next 18 months. This is a sort of transformation one usually expects from a small nimble company operating in sectors like IT, etc - not from a Public Sector behemoth operating in commodity space!
For a long time, there was the overhang of SEBI's requirement to have maximum 75% government ownership in any PSU. This meant that there would need to be stake sales by the government to lower its stake in Coal India from the current almost 80%. However, Coal India and the Government managed to work around this overhang in a very innovative way. Coal India announced a buy back of shares amounting to 1.7% of shares outstanding at a price of Rs 335/share. At that price, it makes zero sense for investors to participate in the buyback, so it is almost entirely available to the government.
Considering the huge dividend payouts by Coal India, it actually makes sense for them to buyback the shares and extinguish them, rather than keep the shares around!
The scale of transformation is actually way beyond the imagination and knowledge of the markets. Coal India is embarking on massive CSR programs to rejuvenate the massive amounts of land it possesses that have been damaged by mining. Techniques like Hydroponic agriculture allow them to get value from this damaged land, plus also generate employment for the large numbers of ex-employees and their families. This is becoming a powerful way to lower their overall wage costs, while repairing environment damage, and using its CSR obligations in a powerful way!
In an environment of falling interest rates, the high dividend yield from Coal India makes it an especially attractive stock. Very soon, Coal India will also be in a position to leverage technologies like Clean Coal to make coal more attractive as a source of energy that doesnt damage the environment.
Its just been 2 years, and today, India is looking to export coal - a transformation that has dramatically shaken up the coal industry.
Over 40% of the costs of Coal India go towards Man power, but with the retirement of a large portion of its workforce over the last 3 years, and the fact that these workers were replaced by younger, lower salary workers, plus a lot of mechanization means that productivity per worker for Coal India is expected to DOUBLE within the next 18 months. This is a sort of transformation one usually expects from a small nimble company operating in sectors like IT, etc - not from a Public Sector behemoth operating in commodity space!
For a long time, there was the overhang of SEBI's requirement to have maximum 75% government ownership in any PSU. This meant that there would need to be stake sales by the government to lower its stake in Coal India from the current almost 80%. However, Coal India and the Government managed to work around this overhang in a very innovative way. Coal India announced a buy back of shares amounting to 1.7% of shares outstanding at a price of Rs 335/share. At that price, it makes zero sense for investors to participate in the buyback, so it is almost entirely available to the government.
Considering the huge dividend payouts by Coal India, it actually makes sense for them to buyback the shares and extinguish them, rather than keep the shares around!
The scale of transformation is actually way beyond the imagination and knowledge of the markets. Coal India is embarking on massive CSR programs to rejuvenate the massive amounts of land it possesses that have been damaged by mining. Techniques like Hydroponic agriculture allow them to get value from this damaged land, plus also generate employment for the large numbers of ex-employees and their families. This is becoming a powerful way to lower their overall wage costs, while repairing environment damage, and using its CSR obligations in a powerful way!
In an environment of falling interest rates, the high dividend yield from Coal India makes it an especially attractive stock. Very soon, Coal India will also be in a position to leverage technologies like Clean Coal to make coal more attractive as a source of energy that doesnt damage the environment.
Coal India - Black Diamond
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