Bloomberg reported that Coal India Ltd the world’s largest producer of the fuel, should refrain from overseas acquisitions because the local market is more lucrative.

Mr Oscar Veldhuijzen a partner at The Children’s Investment Fund Management UK LLP in London said that “There are abundant reserves in India and returns on investment are far higher here.”

Mr NC Jha chairman of CIL said earlier said that the state run miner is considering three acquisition proposals, one each in Australia, the US and Indonesia, as demand for the fuel increases in Asia’s second fastest growing major economy. The rate of return on buying assets abroad will be lower because the cost of purchases could be high.

Mr Deven Choksey MD at Mumbai-based KR Choksey Shares & Securities Pvt said that “A company of Coal India’s size should be looking to expand in different geographies. Fundamentally, I don’t think they are making a mistake. They must do everything that helps them fulfill their supply commitments.”

Environmental curbs and delays in land acquisitions have hampered Coal India’s plan to increase production as utilities in India build power plants to help meet a government target of providing electricity for all households by 2012. Coal is used to generate more than half the country’s electricity.

(Sourced from Bloomberg)