India’s largest coal producer, Coal India Ltd (CIL), had been compelled to reduce offerings via the auction route in Oct’21, in view of the acute coal shortage faced by the coal-fired plants.
Offered volumes in the series of auctions held in Oct’21 decreased 68% m-o-m to 1.62 million tonnes (mn t) since the company had directed its subsidiaries to not offer sales via auctions in this month.
As per CoalMint’s data, the last auction held before the announcement of the temporary suspension of auction sales, was on 9 Oct’21. Post-this announcement, a few subsidiaries, Central Coalfields Ltd (CCL) and Eastern Coalfield Ltd (ECL), had withdrawn their proposed auctions.
Out of the seven coal-producing subsidiaries, only three, namely- South Eastern Coalfields Ltd (SECL), Bharat Coking Coal Ltd (BCCL) and Eastern Coalfields (ECL), had held auctions during October.
Preference to power sector
More than 70% of the total volume offered by SECL under the special forward scheme was marked only for power producers.
Quantity in Million Tonne | Prices in INR/t
The auction garnered resounding response from the buyers as they looked to replenish their depleted coal stock. Notably, the entire offered quantity of 1.15 mn t was booked at a premium of 174% over the notified price.
Similar response was also seen in the special spot auction for ‘coal importers’ conducted by BCCL which fetched a premium of 300%. In this regard, sales in the spot auctions conducted by ECL, BCCL and SECL were rather subdued as these only managed bid premiums of 97%.
Impact on revenues
Lower volumes had little effect on coal sales, as buyers continued to bid aggressively in the auctions. In fact, almost 99% of the total offered volume was booked during Oct’21.
However, the impact was more pronounced in terms of earnings as the booking value for the sold quantity plunged to INR 531 crore in Oct’21 against INR 1,622 crore in Sept’21.
CIL, after a brief absence from the auctions platform, with the help of its subsidiaries, is resuming sales by expanding the volume being offered to its consumers in November.
In fact, the volume put on sale was assessed at 16.65 mn t in the first nine days of November, which has already exceeded the combined volumes offered in the past two months.
Nevertheless, the subsidiaries have shown greater appetite in offering coal to the power plants, thus leaving lesser volume for auction to the non-power sector. This trend is expected to continue till normative coal stock levels at the power plants are attained.
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