Here is good news for investors in Coal India Ltd. The State-run miner’s earnings from e-auction, or spot sales, a major contributor to the net profit, rose in the April-June quarter.
According to sources, the e-auction sales of power-grade coal increased by nearly 30 per cent to 14.65 million tonnes (mt) in the first quarter.
The company sold 11.28 mt of coal during the corresponding period last year.
Over and above the volume growth, sources say, the average price realisation has also increased in this fiscal.
Though the sales volume dropped in July, following Union Coal and Power Minister Piyush Goyal’s decision to divert more coal to the power sector, price realisation remained high. The electricity sector pays lowest price for Indian coal.
“Barring one subsidiary, all coal companies under CIL got better price than last year,” a CIL source told Business Line .
Stranded coalHe said the e-auction sales did not come at the cost of consumers in the power sector as the miner was pushing the “stranded stock” through this route.
“There are mines like Vasundhara (10 mt) in Odisha, which are not connected by rail network. And, power sector consumers do not show much interest in picking up the allotted quantities by road, resulting in piling up of pit-head stock,” the official said, adding the e-auction is primarily aimed at the evacuation of coal from remotely located mines.
CIL’s e-auction realisation went up at a time when the price of imported coal remained soft.
According to India Coal Market Watch (ICMW), from March-April this year, global coal prices are declining. In July, prices of Indonesian coal were substantially down compared to last year. The shipping charges have also been low.
The key reason behind this contradictory movement between the global and Indian market prices is the high cost of moving coal from ports to the hinterland, where the end-users are located.
Also, due to low notified price (contract price), the spot-market prices rule below the cost of imported fuel.