Coal news and updates

CIL’s Q2 net up y-o-y, but down on sequential basis

India Coal Market Watch

 November 16: Coal India Ltd (CIL) has reported a 16% increase in its second quarter (July-September) net profit on a year-on-year (y-o-y) basis, but registered a decline of 32.42% when compared to first quarter (April-June) of 2015-16 (q-o-q).

 The company said in a filing to stock exchanges that the net profit stood at Rs 2,543.80 crore in Q2 of FY16 as against Rs 2,192.38 crore in the same quarter of FY15 (y-o-y) and Rs 3,764.35 crore in Q1 of FY16 (q-o-q).

 The sequential (q-o-q) decline in net profit was attributed to a 10.54% fall in income from operations to Rs 16,957.59 crore from Rs 18,955.75 crore. On a y-o-y basis, the income from operations during the quarter was up 8.16% from Rs 15,677.98 crore.

 The decline in income on a sequential basis (q-o-q) was on expected lines due to decline in production and off-take in the second quarter over Q1 due to the monsoon. However, on a like-to-like basis, ie, y-o-y, both production and off-take were up in Q2 of FY16.

 The company’s coal production in Q2 of FY16 stood at 108.20 million tons (mt), down 10.84% from 121.35 mt in Q1, but was up 5.64% compared to 102.42 mt produced in Q2 of FY15.

 Similarly, off-take was down 5.72% at 121.99 mt in Q2 from 129.39 mt in Q1, but was up 10.41% from 110.49 mt in Q2 of FY15.

 CIL’s income from operations during the first half (April-September) of FY16 showed an increase of 7.28% at Rs 35,915.34 crore compared to Rs 33,477.52 crore in the corresponding period of FY15.

 However, net profit during the first half of FY16 remained largely flat at Rs 6,308.15 crore as compared to Rs 6,225.66 crore in the first half of FY15, reflecting low realisations in the e-auction which was affected due to higher offering through the system and further softness in international coal prices.

 In fact, prices of coal in international markets were down nearly 20% in the first half of FY16 as compared to the same period of FY15 and this impacted CIL’s realisations in e-auction in H1.

 According to data available with ICMW, the average spot price of South African coal (6,000 Kcal/kg) was down nearly 21% to $57.76 per ton in the first half of FY16 from $72.89 per ton in the first half of FY15. Similarly, the average price of Indonesian coal (4,200 Kcal/kg GAR) was down by 19.52% to $29.67 per ton this year from $36.87 per ton last year.

 Consequent to the softness in international coal prices, CIL’s average realisations in spot e-auction fell to 37.72% over the notified price in H1 of FY16 from a high of around 64.96% above the notified price in the corresponding period of FY15, according to data available with ICMW.

 The filing by CIL said that the company had sold a total of 30.74 million tons of coal through e-auction which helped it garner revenues of Rs 6,129 crore at an average realisation price of Rs 1,994 per ton.

 Its realisation for coal sold through the fuel supply agreement (FSA) stood at Rs 1,307 per ton for 211.99 mt of coal that fetched it total revenues of Rs 27,697 crore.

 Following table gives details of CIL’s performance in Q2 & H1 of FY16 vs Q2 and H1 of FY15: