CIL's cash pile to cross Rs 1 lakh crore in the next 3 years

KOLKATA/DELHI: High coal prices and soaring demand for the fuel will add another Rs 35,000 crore to Coal India's reserves, but it will remain idle in bank accounts as 179 of its projects remain stuck in forest clearances starving power plants of the fuel. The Kolkata-headquartered Coal India's cash reserve is poised to cross the Rs1-lakhcrore mark in the next three years as analysts say it will turn out to be the company with the largest reserve.

As of June this year, CIL's cash reserve stood at Rs 65,000 crore, next only to RIL's. However, with some 179 forest proposals stuck in clearance stages, which may take at least three years, the company's investment in these projects will remain minimal.

However, CIL's reserves will largely remain invested in bank fixed deposits till the time they are used for project investments since the company is not too comfortable with investing in government securities since it needs to hold them till maturity.

It is only recently that CIL has invested Rs 5,000 crore in debt funds.

"Last year, the company received its board's approval for investing in liquid debt mutual funds to the extent of 10% of its reserves. But it started with a small corpus of 500 crore which was invested in LIC, Nomura, UTI, SBI and Canara Robeco.

"We will also increase the amount when we turn comfortable investing in these funds," said A K Sinha, finance director. "Rest of the money is in fixed deposit form with 19 banks and with overall return of such deposits around 10% returns have increased to some extent," he said.