Assignment_Corporate Finance_Cash flow drivers and valuation
Coal India Limited Cash Flow drivers O&M expenses Valuation It is a part of operating expenses and therefore affects EBITA of the business and can easily be incorporated into valuation. Control O&M expenses can substantially be controlled by proper inventory management and efficient utilization of power and fuel. Coal India ltd is using high capacity heavy earth moving machineries, which is either electrically driven or operated by a diesel engine. Therefore company has to spend high amount on the fuel and electricity. On the other hand for maintaining these machines company need to maintain huge inventory of spare parts. Coal Prices Valuation Coal price affects the revenue of the company and therefore EBITA of the company and can be incorporated into valuation. Control Although company is free to decide the coal prices but it cannot go beyond market prices and it is not possible to change the prices frequently (to match with international coal prices).Therefore ther is some degree of control on the price of coal. Productivity of Employees Valuation Productivity of employees is directly related with production of coal. Increase in the productivity of employees will lead to increase in the production of coal which in turn increase the revenue. Control
Assignment_Corporate Finance_Cash flow drivers and valuation Submitted by Deepesh Vaishanava Roll No. 08
Total manpower of CIL is 4.17 lacs. Productivity of employees could be increased by giving them proper training, providing the required tools and materials on time etc. There are many other factors which can affect the cash flow of the company but I am not able to link them to valuation of the company. Those are Loss of coal due to coal-fire caused by long exposer to atmosphere.
Low grade coal has a property to catch fire when exposed to atmosphere and major chunk of Indian coal fall in this category. This causes a substantial loss to the...