There is no denial of the fact that Coal India Ltd (CIL) played a major role in replenishing the inventory levels at the power plants, which had fallen headlong during Sept’21.
Coal inventories at power plants monitored by CEA have improved to 10.5 million tonnes (mn t) as on 30 Oct’21 — sufficient for six days of power generation, against 8.08 mn t of stocks recorded at the end of Sept’21.
In doing so, CIL’s own inventory assessed at the pit-head mines has declined to a new low of 35.19 mn t at the end of Oct’21. The last time such levels were seen was in end Jan’20 — when the inventory was recorded at 32.36 mn t.
The mining giant had started the fiscal with a surplus inventory of 99.33 mn t, but the stock level saw a steady fall on account of higher dispatches that were made to satiate the elevated power demand.
What went wrong?
The company maintained a higher dispatch level in FY’22 compared to the previous fiscal.
Notably, after a brief spell when supplies were affected due to the monsoons, it made a strong comeback by registering dispatches of 56.66 mn t in Oct’21, which was the highest since Mar’20.
As a result, total coal dispatches have increased 20% y-o-y to 365.02 mn t during Apr-Oct’21 compared to 305.27 mn t in Apr-Oct’20.
However, similar growth was not seen in the production levels, which has been a reason for the steep fall in coal inventory.
Interestingly, CIL’s coal dispatches in Apr-Oct’21 were 22% higher than the production attained in the corresponding period, which indicates significant growth compared to the past fiscals.
CIL Performance Trend during Apr-Oct
Quantity in Million Tonne
Implications
Fall in inventory level at the pit-head mines is a cyclical phenomenon for CIL which is expected to improve gradually with pick-up in production during the second-half of the fiscal.
Nevertheless, it is important to note that the present inventory levels at the power plants are far lower than the normative stocks of 14 days which means that the stock replenishment at CIL mines will be at a slower pace.
Subsidiary-wise coal inventory at end of Oct’21
Quantity in Million Tonne
In this situation, lesser coal offering for auction sales is likely to continue especially from the subsidiaries which are facing low stock levels.
In fact, CIL was compelled to reduce offered quantities for sales via the auction route held during Oct’21, where out of the seven coal-producing subsidiaries, only three had held auctions.
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