Coal e-auction. Coal India likely to see lower sales via e-auction

Coal India Ltd is likely to register lower sales through e-auction route due to higher supplies to the power sector, which has been reeling under the pressure of lower stocks. The average realisation through the e-auction platform is however, likely to be much higher as compared to last year.

The country’s largest miner had a total booking of close to 120 million tonnes (mt) and sold close to 94 mt through e-auction route in FY-21. Sales through e-auction route accounts for around 15-16 per cent of the total volume of coal sold.

According to Pramod Agarwal, Chairman and Managing Director, CIL, the company would try to achieve sales of around 90 mt through e-auction route this fiscal.

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“Last year, the total booking was 120 million tonnes. We will try to achieve that figure, but giving any firm commitment at this point of time will be difficult because, I do not know how the power demand is going to pan out. The expectations from power sectors are very high. If their expectations prove to be right, then perhaps this figure will get reduced,” Agarwal said at the post earnings conference call recently.

During April-October 2021, CIL saw a 24 per cent increase in supplies to power sector at 294 mt as against 237.8 mt same period last year.

“In October, the supply for this e-auction would have been less, because of the power crisis in the country and the stocks were going down in the power houses, we had to give extra supply to powerhouses. Actually in October, we supplied almost 56 mt to powerhouses which was about 4-5 mt more than the last year,” he said.

The heavy rainfall in the initial week of October too affected overall dispatches. Though CIL ramped up supplies during the year as compared to last year, most of the increased supply went to power houses.

Higher premiums

CIL has been getting “very high premiums” for its offering on e-auction platform. This is primarily on the back of a steady demand for coal both from power and non-power sectors and firming up of international coal prices.

The company, which was getting close to 30 per cent over its notified price in August this year, has been achieving average premium of over 45-50 per cent in the last quarter. The average price realisation through e-auction route in Q2FY-22 was close to ₹1,569 a tonne.

However, according to Agarwal, it is not a question of premium but that of supply. “Whatever we offer, the premiums are very high,” he said.

Depending on the demand situation, CIL injects a reserve price, which is basically the floor price, over and above the notified price, at which the auctions begin. This is done based on the kind of response received at e-auction and the amount of premium garnered. An improvement in premiums over notified value is expected to boost the company’s bottom line.

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