Coal news and updates

CIL e-auction offerings to sharply drop in July, hit bottomline

July 25: The quantity of coal offered by Coal India Ltd (CIL) subsidiaries for sale through e-auctions is likely to see a sharp decline in July 2014, thus impacting the coal behemoth’s margins in the second quarter (Q2) of 2014-15, informed sources told ICMW.

“The coal ministry recently stated that it is planning to reduce the coal quantity offered by CIL through e-auction. The indication so far is that the volume offered in July will drop significantly,” the sources said.

This, in turn, would heavily impact the Q2 margins of CIL, they said.

Incidentally, coal offered by CIL subsidiaries and Singareni Collieries Company Ltd (SCCL) on the coaljunction platform dropped by 60% to 1.69 million tons (mt) in June 2014 month-on-month. It was also halved on an annual basis and to a record low since August 2012.

Recent reports said the government is planning to reduce the e-auction limit for coal by 25 mt to cater to the demand from the power sector in the coming quarters.

Analysts forecast that the decision would lead to a sharp decline in CIL’s margins by around Rs 2,500 crore. In 2013-14, CIL’s net profit dropped 12.93% to Rs 15,111.67 crore from Rs 17,356.36 crore in 2012-13, mainly due to lower realisation from e-auctions.