Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

CIL - A classic case of public monopoly
Fri, 9 Jan Pre-Open

Coal India workers going on strike have recently hit the headlines of most of the leading financial dailies. The move from the workers has come after the government has initiated the process to denationalise coal with its recent Bill. The said strike is believed to have impacted production at over 75% of the coal mines. With so much of dependence for sourcing coal, the biggest concern has been impact on electric supply.

Though the strike was called off in a day's time, the problem remains intact. With a monopoly in coal mining for decades, the state owned miner, Coal India has had no incentive to bring in efficiency. Corruption, mining bans, maoist attacks, labour unrest, poor efficiency, incompetent governance and political interference have been haunting the prospects of coal mining sector in India.

Mining has faced multiple problems since many years now. Private mining of coal for industrial consumption has been banned for over 42 years now. This is despite the fact that India has amongst the world's largest reserves of coal. Not surprisingly, the country's power plants have been deprived of the mineral thanks to dependence on high cost imports. As per an article in Mint, India's coal imports have almost doubled this year as compared to 2011-12 at 100 million tonnes. Further, these imports are expected to increase for the upcoming period too since Coal India's production is still at unsatisfactory levels. The coal imports continue to rise at anything over 20% each year.

The government policies have so far have not utilized the strengths of the resourceful companies' like that of Coal India in an efficient manner. However, the government has now realized the potential of optimizing the use of natural resources to stoke GDP growth. The recent ordinance passed seems to be a positive development. However the task will not be an easy one and more tumbling blocks will hinder the way as seen recently.

With a solid balance sheet, plenty of reserves at its disposal and growing demand for its produce, all Coal India needs to do is to improve its efficiency level. Thus if government is able to come up with good policies, make it professionalized and inject good technologies this resource rich company can be an important contributor to GDP and growth driver for other projects.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "CIL - A classic case of public monopoly". Click here!


Views on News

President Trump's Real Test (Vivek Kaul's Diary)

Jun 6, 2018

Donald Trump refers to making America great again. As per him the tax cuts are working. But is that the entire truth? Bill Bonner offer insights on the same.

Insider Leaks Equitymaster Stock Picks (The 5 Minute Wrapup)

Jul 25, 2017

Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?

Raymond and Other 'For Profit' Companies Who Don't Care about Shareholder Returns (The 5 Minute Wrapup)

May 27, 2017

What happens when minority shareholders are short-changed in the normal course of business?

Why Commission Driven Model In Mutual Funds Should Be Eliminated... (Outside View)

Feb 15, 2017

PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.

This Book Changed How I Looked at the World of Man and Money (Vivek Kaul's Diary)

Aug 24, 2016

And here's your chance to claim a free copy of this book...

More Views on News

Most Popular

After Vakrangee and Manpasand, More Auditors May Soon Resign. To Protect Your Wealth, Avoid these Stocks(The 5 Minute Wrapup)

Jun 8, 2018

The change in auditing regulations can bring a big change in corporate governance behaviour in the mid and small-cap space.

Should You Get out of Small Caps Now... Before the Fall Worsens(Profit Hunter)

Jun 6, 2018

An almost zero-loss strategy that works best when markets correct. Don't let the current volatility overwhelm you. Focus on the fundamentals and long term, and buy stocks where quality meets value.

Why Bank-Mergers Continue to Remain a Bad Idea(Vivek Kaul's Diary)

Jun 5, 2018

A newsreport suggests that the government plans to merge four public sector banks. We think it's a bad idea.

Has the Market Bottomed Out?(Sector Info)

Jun 11, 2018

The yield spread is an effective barometer that can indicate the direction the markets are headed.

Is Data Pointing Towards a Revival in the FMCG Sector?(Sector Info)

Jun 8, 2018

After several quarters of stress in the aftermath of demonetisation and the rollout of GST, this data is pointing towards revival in the India's rural FMCG industry.


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms