Country’s largest coal miner-Coal India Ltd is expected to fall short of its production target of 660 mn t set for FY ’21, after production level remain subdued in February.
In spite of the lesser number of working days, the company managed to register a nominal growth of 2% m-o-m in coal production to 61.86 mn t in Feb ’21 against 60.47 mn t in Jan ’21. However, production rate of 2.21 mn t/day during the month was assessed 3% lower on the year from 2.28 mn t/day in Feb ’20.
This is not the first time CIL would fail to attain its production target, yet shortfall this term has been largely driven by COVID-19 led demand contraction rather than operational liabilities.
With relaxation in lock-down norms, the company had raised production post Aug ’20 but that was short-lived as sudden drop in power demand again forced it to lower coal volume in the final quarter.
Overall coal production during the first 11 months of FY ’21 (Apr-Feb period) has reached 515.22 mn t, recording a marginal decline from 517.8 mn t in the year-ago period.
Lower sales piling up coal inventory:
With demand from the power sector yet to crystallize fully, the company has found it difficult to augment coal supply at a time when the power houses are already equipped with surplus inventories.
CIL’s coal dispatch dropped to a 4-month low of 51.25 mn t in Feb ’21, thus leading to excessive stock build up at the mines which now accumulate 77.75 mn t coal at the end of month, up from 44.11 mn t noted in the year-ago period.
The company would be hoping to emulate previous fiscal heroics by attaining new high in coal production during March in order to avoid y-o-y decline in overall output for the second straight fiscal. Nevertheless, the prospect of coal stock reaching to substantial level would be a concern if demand fails to recover as envisaged.
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