‘Logistics efficiency holds the key to CIL’s growth’

According to Coal India Ltd’s (CIL) outgoing Chairman Sutirtha Bhattacharya, trimming logistics costs will help the miner grow in the long run.

Bhattacharya, who had taken over the chairmanship on January 5, 2015, will retire on August 31.

The ex-mine price of coal, he said, is not more than a third of the landed price of coal to the consumer located 750 km from the pithead. The rest of the value goes to taxes and rail freight.

Coal is the single largest revenue earner for the Railways.

Bhattacharya is not far from the truth. Vizag Steel pays ₹3,000 a tonne landed cost for CIL’s raw coal, sourced from 600 km away. The steel plant would have saved substantially had it opted for importing beneficiated Indonesian coal, available in Visakhapatnam at ₹3,800 a tonne including green tax.

“Over the past year, power plants have cut down on coal inventory drastically and relied on CIL and Railways for just-in-time delivery of fuel.

“That we succeeded in meeting this challenge is an indication of the improved logistics efficiency,” he said.

The entire nation stood to gain, he said, as lower inventory helped power plants to cut operating costs and reduce the cost of supplies to discoms.

CIL has appointed RITES to take the cooperation agenda forward with the Railways, to help fill the logistics gaps and improve operational efficiency.

Soon after taking over the chairmanship of CIL, Bhattacharya said increasing coal output and improving quality of fuel were his prime objectives.

Asked about these promises, he said the availability of fuel is no more a concern. Despite offering as much as 20 per cent production in the open market (up from 10 per cent two years ago), over and above meeting the contract obligations to the power sector, CIL was forced to suppress production in the first half of this fiscal, so as to liquidate a huge stockpile of 68 million tonnes fuel.

“I am formally and informally told by a class of consumers that quality is improving.

“However, I am not saying we achieved the goal of a customer-friendly organisation. CIL should remain consistent in its attempt to be market friendly,” he said.

Bhattacharya anticipates intense competition in commercial coal mining in the near future as State mining corporations are allowed to enter the field.

Meanwhile, uncertainty looms over the next head of the company.

The Public Enterprises Selection Board (PSEB) on Friday rejected all the six shortlisted candidates for the post, including the chairmen of several CIL subsidiaries.

The Centre is yet to announce a part-time chairman as well. Some clarity is expected on Wednesday, when Coal and Power Minister Piyush Goyal meet company officials for a review meeting.

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