Coal news and updates

CIL reports 11.40% decline in Q3 net profit

February 13: Coal India Ltd, the world's single largest coal mining company, on February 12, reported an 11.40% decline in its third quarter (October-December) 2013-14 net profit on account of lower realisations per ton in the e-auction and increased supply of coal to the power sector at the notified price.

The company's net profit during the quarter slipped to Rs 3,894.09 crore from Rs 4,395.11 crore posted in the corresponding quarter of 2012-13, the company's Chairman S Narsing Rao told reporters after a board meeting to consider financial results for the quarter in Kolkata.

The company's net sales in the third quarter fell marginally by 2.29% to Rs 16,928.13 crore from Rs 17,325.04 crore in the same quarter of 2012-13.

However, on a quarter-on-quarter basis, the company's net profit was up more than 27% from Rs 3,052.36 crore reported in the July-September, 2013 quarter. Net sales, however, were up by only 0.86% from Rs 48,398.17 crore.

"The decline in third quarter net profit this year as compared to the previous year was due to increase in the cost of production and decline in average realisations. … During the nine-month period, the cost of production was up by Rs 12 per ton while average realisations were down by about Rs 13 per ton, making it a total of Rs 25 per ton," the chairman said.

Rao said, despite an improvement in average realisations per ton of coal during the third quarter to Rs 1,448 per ton from Rs 1,432 per ton last year, the company's average realisation during the nine-month period fell by Rs 25 per ton to Rs 1,433 per ton from Rs 1,455 per ton during the nine months of 2012-13.

E-auction:

Commenting on realisations through the e-auction route, Rao said, "The average realisations from e-auctions were down to Rs 2,232 per ton in the third quarter of 2013-14 from Rs 2,941 per ton in the same quarter of 2012-13."

The quantity of coal sold through e-auction in the quarter, however, jumped almost 50% to 15.14 million tons from a low of 10.48 million tons in the same quarter of the previous financial year, he said.

The average realisations from e-auction during the nine-month period of 2013-14 on the other hand slipped to Rs 2,198 per ton from Rs 2,581 per ton during the same period of 2012-13, Rao said, adding a total of 41.26 mt of coal was sold through e-auction during the nine months of 2013-14 as compared to 35.61 mt sold in corresponding period of 2012-13.

To a query, the chairman said, the company had supplied about 2 million tons of coal to new consumers who had signed fuel supply agreements (FSAs) while there was about another 10 million tons of increase in supplies to FSA consumers.

Off-take:

Commenting on the off-take position, Rao said the company's off-take was growing at an impressive rate till September 2013 and stood at about 5.4% despite lower off-take by major consumers in the July-September quarter.

However, the off-take dipped suddenly in October due to the festival season and was below expectations in November, leading to overall negative growth in off-take in the third quarter and showed an overall growth of only 1.8% at the end of December 2013, he said.

The extended monsoon and frequent bandhs in Ranchi area also affected off-take in Q3, he added.

Rake availability:

Asked about the rake availability position from Indian Railways, Rao said, "By and large, the rake availability scenario was good not only in the third quarter, but even in the current quarter (January-March). The average availability was 220 rakes per day in Q3 and stood at about 213 rakes per day in February 2014," Rao said.

Asked about the current off-take position from major consumers at present, the chairman said, "In the last few days, it was found that two major consumers – GSECL and HPGCL –reduced their off-take."

Vendible stock:

Rao said because of lower off-take and slight improvement in production, the company's pithead vendible stock, which had dipped to a low of around 33 million tons on the last day of September 2013, has risen slightly to around 35 million tons as of February 11, 2014.

"Going by the current trend, as there would be significant jump in production in February and March, we may end up with a pit-head vendible coal stock of around 47-48 mt as on the last day of the current financial year i.e March 31, 2014," he said, adding, the stock stood at around 60.50 million tons as on April 1, 2013.

Capex:

Asked whether the recent announcement of a record interim-dividend by the company, which will lead to an outgo of around Rs 1,8000 crore from the reserves, will affect CIL's expansion plans, Rao said, "For the current Five-Year Plan, we had planned to invest around Rs 5,000 crore per year and we do not see this figure going up significantly in the balance years of the 12th Plan ending 2016-17."

Even for the 13th Plan, Rao did not see investment requirements going up significantly.

"There will be no problem in investment during the next 10 years despite paying a record dividend during the current financial year even if we reach a production level of 1 billion tons by the end of 13th Plan," the chairman said.