Coal India Ltd (CIL), the country’s largest coal miner, recorded a meagre growth in production of 2% y-o-y to 124 million tonnes (mn t) during the first three months (Apr-Jun ’21) of the current fiscal compared to 121 mn t seen in the same quarter last year.
Higher production levels were maintained in each of the three months, but total production remained 9% lower than 136.96 mn t recorded during Apr-Jun ’19 (pre-Covid period).
The company’s operations were affected by reduced manpower due to the Covid outbreak. However, the lower production was primarily due to to lower-than-expected coal dispatches rather than any operational shortcome.
Power consumption yet to stabilise
CIL’s sales largely depend on the performance of the power sector, which is its major coal consumer. However, the power plants failed to sustain their demand on account of lockdowns.
As per data from the Ministry of Power , electricity consumption grew by 10% y-o-y to 115.39 billion units (BU) in Jun ’21 compared to 105.08 BU in Jun ’20, but is still lower than the pre-Covid levels. Notwithstanding the improvement, power consumption in Jun’21 is still lower than in Jun’19 (pre-Covid level), when it was at 117.98 BU.
After an encouraging start to the fiscal, generation from coal-fired plants has slowed down in the later months which had an impact on CIL’s dispatches. Moreover, power plants running at a very high inventory had also affected coal supply.
Notably, dispatches during the month of Jun ’21 were assessed 7% lower on the month at 51.34 million tonnes (mn t) compared to 55.14 mn t in May ’21.
Overall, coal dispatched in the first quarter witnessed a robust growth of 33% y-o-y to 160.3 mn t, but that came on the back of a weaker base period when the country’s economic activity was jolted by the initial Covid wave.
Nevertheless, higher dispatches have helped the company to liquidate its excess inventory which has come down to 63.4 mn t at the end of Jun ’21.
CIL has set a lower production target of 640 mn t for FY ’22, but disruptions during the rainy season and an uncertain outlook due to Covid may force the company to further revise its target, going forward.
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