Coal India Limited (CIL) has announced its board’s approval to provide a substantial corporate guarantee to its subsidiary, CIL Rajasthan Akshay Urja Limited (CRAUL). This guarantee, amounting to ₹3160 crores, is intended to support the funding of CRAUL’s ambitious 875 MW solar photovoltaic plant.
The decision, made during a recent board meeting, aligns with Coal India‘s strategic initiatives to expand its footprint in renewable energy through its joint venture with Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL). CRAUL, a joint venture between CIL and RRVUNL, sees CIL holding a significant 74% equity stake, while RRVUNL holds the remaining 26%.
The corporate guarantee ensures that CRAUL can secure necessary debt financing for the capital expenditure required for the solar project. This move underscores CIL’s commitment to renewable energy projects, as it seeks to diversify its portfolio beyond traditional coal mining operations.
The guarantee also highlights the potential financial exposure for Coal India, as it assumes liability up to ₹3160 crores should CRAUL default on its debt obligations. However, the transaction is structured at arm’s length, considering CIL’s majority stake in the joint venture.
This development is part of Coal India’s broader strategy to engage in sustainable energy projects, reflecting its adaptation to the evolving energy landscape in India.
Disclaimer: This article is based on a regulatory filing submitted to the National Stock Exchange of India (NSE).