India: Coal India sales via FSAs jump 16% on robust power demand

Coal India Ltd (CIL) has reported an uptick in sales via fuel supply agreements (FSAs), driven by the spurt in demand from the power sector post-ease in lockdown restrictions.

FSA sales (excluding washed coal and by-products) grew 16% y-o-y to 540.21 million tonnes (mnt) in FY22 against 466.38 mnt in FY21, based on data provided by the company in its quarter results. The growth marked rebound in sales volume which had fallen in the past two fiscals due to the Covid-induced demand disruption.

It may be recalled that the company has two modes of coal sales, FSA and e-auctions, of which the former is specifically designed to provide uninterrupted supply to the coal-based power plants.

To meet the escalated demand, CIL subsidiaries made an all-out effort to meet the FSA commitments but this came at the expense of e-auctions where offerings were reduced drastically.

However, overall sales via auctions also rose to a record high of 110.8 mnt in FY22 as it included pent-up supplies made against the long-term auctions that were concluded last year.

Auction prices edge higher

Demand revival helped CIL to garner higher price realisation for coal sales. However, the rise was more pronounced in case of e-auctions.

Coal in the auctions was sold at an average price of INR 1,879/t in FY22, up 20% y-o-y from INR 1,569/t in FY21. This was primarily due to the supply disparity which compelled the buyers to raise their bids.

In contrast, prices with regard to FSAs saw a modest rise of 2% y-o-y to INR 1,407/t in FY22 against INR 1,379/t in FY21.

Financial highlights

In terms of the financial results, CIL’s consolidated profit increased 37% y-o-y to INR 17,358 crore in FY22, on the back of higher earnings from operations.

The company’s turnover jumped 22% y-o-y to INR 109,714 crore in FY22, while the net revenue stood INR 113,618 crore in the period.

On the other hand, expenses rose 19% y-o-y to INR 89,993 crore in FY22, as the company lose part of its earnings mainly on account of employee benefits and contractual obligations.