Coal news and updates

No proposal to increase prices: CIL

September 16: Coal India Ltd (CIL) Chairman & Managing Director S Narsing Rao, on September 16, said the company currently has no proposal to increase coal prices.

In an interview to ICMW, Rao said, “There is basically a kind of implied policy in the company that periodically we take stock of the cost of production and, based on that, we revise our prices.”

CIL had gone for a major price revision in 2011 and then it had made a marginal adjustment in end-May, 2013.
Asked whether they will wait till July 2016 to raise prices as the next wage agreement is due only then, Rao said, “Wage revision is one aspect and there are other parameters like cost factors. Basically, the board reviews the cost of production, the factors which are driving the cost of production and then decides.”

“Obviously, based on the cost of production and volumes growth, the board takes a call on price revision. We regularly evaluate, but take a decision only when the board thinks it is appropriate,” he said.

“But certainly, we currently have no proposal to increase prices,” the CMD added.

Asked if low realisations at e-auctions in recent months have been a cause of concern for the company as margins have fallen sharply in Q1 of 2013-14 because of that, the CMD said, “E-auction realisations are not in our control. These are basically a function of the demand-supply situation, international prices. Volumes are in our control, how much we sell is in our control… but, at what price, is not in our control.”

“How much we sell through e-auction is in our control, but what price it would fetch is not in our control and there is nothing we can do about it. We can only revise the offering from time to time,” Rao said.

He added that e-auction is not the only factor that helps CIL maintain margins even though it helps the company generate additional revenues which contribute to profits.

Rao said profitability is also related to the cost of production and margins and it is a combination of everything. “We get income not only from e-auction, but through interest income, volume income and, once in a while, increase in prices.”

Asked how much coal CIL intends to sell through e-auction in 2013-14 and in the coming years, the CMD said, “Volumes will be in the same range, ie, 48-50 million tons annually. My expectations are that it would remain the same. The percentage would obviously come down because our yearly volume in production is there, but in absolute terms, it should remain more or less same.”