The flip side of rising coal production is now showing.
Coal India Limited (CIL) now has no way other than lowering its production during this summer to tackle with dwindling sales.
Higher coal production in the country has enabled power producers to stock ample inventories at their stockyards, necessitating lesser regular purchases. As a sequel to this, sales as well as production of CIL have taken a hit during the first two months of the current fiscal.
CIL’s PRODUCTION AND SALES IN APR-MAY’16
According to the latest figures released by the state-run miner, its sales grew by a meager 1% during the Apr-May’17 period against the same period of the previous fiscal. It also achieved a lean production growth of 0.5% in the period of the current fiscal under consideration as compared with the corresponding period of the last fiscal.
CIL has failed to achieve its production as well as sales targets for the Apr-May’16 period.
The miner produced 82.93 MnT during the period against the target of 89.12 MnT. During May’16 and Apr’16, its productions were at 42.58 MnT and 40 MnT respectively, missing the respective production targets of 44.64 MnT and 44.48 MnT.
Source: CIL
Likewise, its sales during the first two months of 2016-17 were at 88.23 MnT, lower than the target of 102.36 MnT.
During the Apr-May’16 period, CIL had recorded remarkable sales and production growth of 7.4% and 11.8% respectively over the corresponding period of the preceding fiscal.
Furthermore, the figures were in the negative zone for some of CIL’s subsidiaries. Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL) and Central Coking Coal Limited (CCCL) reported negative sales growth of 5.2%, 5.6% and 13.8% respectively during the Apr-May’17 period. Production during the period also had gone lower for ECL, CCCL and Western Coalfields Limited by 9.9%, 1.2% and 25.3% respectively.
SURPLUS STOCKS CAUSED THE DECLINES
CIL has attributed the lower production and sales during the period under consideration to coal fired power utilities having adequate coal stocks at their arsenals. According to the latest figures, stocks at power companies towards May’16 end were cumulatively at around 32.65 MnT, which are, however, expected to be depleted within 22 days. Coal stock depletion at power companies will enable CIL to ramp up its sales and liquidate its stocks.
Despite lower sales, CIL was able to bring down its pit-head stock by 5.07 MnT during the first two months of the current fiscal. CIL had a pit-head stock of 57.64 MnT at the beginning of 2016-17.
CIL’s COUNTER PLAN
To tackle with declining sales, CIL is learnt to have planned for bringing down its production during this summer.
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