Coal news and updates

Shyam Steel forced to source 70% of coal via imports

May 13: Weighed down by the inability of Coal India to supply the full quantum under the fuel supply agreement, Kolkata-West Bengal-based construction steel player Shyam Steel is depending heavily on procurement through imports and e-auctions, director Lalit Beriwala told ICMW.

Consequently, Shyam Steel is being forced to import coal (non-coking) from South Africa. It has to rely on imports for almost 60-70 percent of its requirements. But imported coal prices are high. At present, the approximate landed cost in rupee terms is nearly Rs 7,000 per ton against the domestic landed cost of around Rs 4,500 per ton, which means a huge forex outgo and increased cost to the steel industry, Beriwala added.

"Our main fuel source is non-coking coal for which we have a fuel supply agreement (FSA) with Coal India Limited (CIL) but it manages to provide us with drastically low levels as compared to our requirement. Our total steam coal requirement per annum is two lakh tons. However, CIL India can supply a mere 10,000–12,000 tons!" Beriwala revealed.

However, he said, even in the e-auctions, the quality is not always up to the mark. "For instance, there is often a mismatch between the gross calorific value (GCV) of the coal we need (which is 6,000 Kcal/kg) in the e-auctions and the actual material that is delivered to us. Moreover, we do not often get the rakes when we purchase through e-auctions," he added.

There are logistics issues as well. CIL provides coal through rakes but owing to lack of the same, the allotment gets cancelled.

"We have to get the refund against the advance payment already made and repeat the whole process. These are persistent problems that need to be resolved on a war footing," Beriwala observed.

The company is looking to close the last fiscal with a turnover of Rs 1,300 crore.