CIL: Coal allocation under FSA drops 5% y-o-y in FY20

India’s biggest miner, Coal India Ltd, has reported a decline in its annual coal volume dispatched under contacted supplies.

Allocation under Fuel Supply Agreements (FSA) which accounts for 86% of its total dispatch, had come down 5% y-o-y to 501.03 mn t in FY20 against 525.43 mn t in FY19.

Dealing with subdued demand from the power sector, the coal company had faced difficult operating conditions during the fiscal wherein a drop was recorded in overall dispatch volume.In particular, coal supply in the second quarter (Jul-Sep) of FY20 was severely hindered on account of excess and prolonged monsoons.

Although the company tried covering the lost ground in the latter half of the year, where dispatch of 139.17 mn t under FSA was attained during the fourth quarter of FY20, it remained 2% lower than the volume of 142.42 mn t recorded in the corresponding period of last fiscal.

Price realization for coal

Flat sales from coal business resulted in a decline in company’s consolidated profit earned during the fiscal year ended on Mar’20, which decreased 4% on the year to INR 16,700.34 crores.

Despite the drop in net sales accrued from FSA, the price realization of coal through this route of allocation increased 4% y-o-y to INR 1415.7/t in the fiscal. Contrarily, average realization on sales through e-auction route dropped 17% y-o-y to INR 2177.43/t during the fiscal wherein 65.4 mn t coal was supplied.

Source: Company filing
Quantity in mn t | Prices in INR/t

Brushing aside the competition posed from the likely entry of private mine under commercial mining; CIL has vowed that it would remain market pioneer in coal sector. However, slump in end-user demand due to COVID-19 indicates that the company’s financial result would be affected in the ongoing fiscal of FY21.