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Coal India Ltd (CIL) is looking to bring down its cost of production in a bid to remain ‘competitive’ at a time when the Centre is opening up the coal sector to commercial mining by private entities.
According to Gopal Singh, Chairman and Managing Director of CIL, the company will focus on bringing down the cost of production by improving productivity and efficiency with a view to maintain its position as market leader.
‘No threat to CIL’
“We are market leaders and we’ll do whatever it takes to remain so,” Singh told newspersons at a press conference here on Friday.
Allowing commercial mining by private entities would not be a threat to CIL. On other hand, it will be an opportunity, he said. According to him, CIL enjoys a monopoly not by choice but by compulsion.
“This is not the first time that CIL’s monopoly is being challenged,” he said.
He was referring to the time when the coal sector was thrown open to the private sector, when they were offered close to 200 captive blocks. However, the exercise was a failure.
CIL, Singh said, will focus on mechanisation, automation and innovation to bring down cost of production. It will also focus on managing its inventory to keep costs lower.
In terms of pricing, CIL’s coal prices have been cheaper by 42-64 per cent compared with imported coal even after the price hike in January 2018, he said.
Capex
The State-owned miner is planning to increase its capital expenditure to ₹9,500 crore in 2018-19 to strengthen production capacity. For the current fiscal, CIL exceeded its planned capital expenditure at ₹8,693 crore; compared with a target of ₹8,500 crore.
According to Singh, a reduction in cost of production translated into 11 per cent increase in profit before tax for CIL during the third quarter of this fiscal.
“We did not take any price hike during the first three quarters this year, the improvement in profitability is mainly on account of reduction in cost of production,” he said.
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