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In addition to price advantage and higher interest income, a surge in production in November may prove to be a major revenue booster to Coal India Ltd in the October-December quarter compared with the corresponding period in the previous year.
CIL maintained the profit growth in July-September quarter this fiscal riding only on interest income against Rs 45,000 crore cash reserve and a higher price of coal effected from March 2010.
With power sector reportedly ‘failed to lift' the additional 5 million tonne offerings diverted from e-auction between October 15 and October 31; the company has also resumed the highly profitable open-market sales in full vigour. E-auction fetches nearly 70 to 80 price per cent higher revenues to CIL over and above the notified price, at which coal is offered to power sector.
“We have stepped up offerings through e-auction,” a senior CIL official told Business Line . The total sales through this window during the quarter will be higher than the same period last year. The realisation so far is higher than our expectation, he added. CIL has annual target offer of 50 million tonne of coal through auction window.
Production boost
According to sources, after a subdued October (primarily due to the after effects of flood), production bounced back on growth path in November.
Available estimates suggest that till November 27, production has crossed 34 million tonne, which is similar to the total production during the month of October 2011. The production in November is estimated to cross 36 million tonne.
“We are expecting a 4-5 per cent production growth in November and December,” a company source said.
Offtake falling behind
The higher production, however, has not been free from its share of worries on transportation front.
The coal offtake in October-November has fallen short of the production by approximately 2 million tonne, indicating an accumulation of pit-head stock.
Company sources, are however, confident that railways will come to the rescue of CIL by offering more rakes. “We are now getting nearly 180 rakes a day, which is nearly 12-13 rakes a day higher than last year. We are hopeful that additional rakes will be put into service by the railways to ensure distribution of coal to consumers,” the official said.
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