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For all practical purposes, 2011 proved to be a great leveller for Coal India Ltd. Having started this calendar year on a positive note after a successful IPO in end-2010 and soaring share prices, the public sector coal producer ended the last fiscal (2010-11) with zero production growth, at 431 million tonnes (mt).
Although, officially, the company is targeting higher production in 2011-12, concerns are rife that it is destined to end another fiscal with zero growth or even witness a contraction in output .
Revision of target
Having begun the current fiscal with ambitions of hitting 452 mt , the company has already revised the target to 440 mt. CIL was nearly 20 million tonnes off-mark during April-September. When compared to the corresponding period in 2010, production was down by 10 mt.
The dismal performance was attributed to weather conditions and flooding of major opencast mines in eastern India.
Though the gap in production widened further in October , CIL had definitely pulled up its socks since November with average daily production crossing 1.3 mt, thereby raising hopes of reaching level with last year's production of 110 mt in the October-December quarter or even posting a marginal growth in the current quarter.
Uphill task
Latest estimates suggest that CIL ended November with 38 mt and is destined to end December at approximately 40 mt, taking the total production for the third quarter to 111 mt, which is more or less the same as in the corresponding period last year .
To put it straight, CIL may end the first nine months of this fiscal with a production gap of nearly 10 mt when compared to 2010-11, thereby making it mandatory for the company to produce nearly 156 mt in January-February 2012 as against 136 mt in the previous fiscal.
Simple arithmetic suggests CIL should step up its productivity ratios by 30 per cent from the current level, to 1.7 mt a day, to reach the targeted level of production.
“Going by the records, it's an uphill task,” said a company official on condition of anonymity. “It will be a modest achievement if we are able to wipe out the 10 mt production gap to level with the last year's figures,” he added.
Availability factor
Interestingly, even if the company steps up production, the availability of coal would not improve until the availability of wagons (that transport coal) increases. Available estimates suggest that of-take started falling behind production beginning November, leading to accrual of pit head stocks.
While the company is pinning hopes on projected availability of nearly 220 rakes a day, any shortfall in rake availability will only add to the inventory. Incidentally, higher inventories had often forced the company to cut back its production plans in the past.
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