Coal India (CIL) may reduce its coal production this year as it is struggling to manage unsold coal inventory every month.
CIL’s rise in production during FY16 has led to trouble in inventory management as the company seems incapable to manage extra coal at stockyards now a days. Earlier, the ministry had set a target of 550 MnT of coal production for FY16 to cater rising domestic demand.
[su_pullquote align=”right”]“We need to look at all available options and make sure that the company will be able to sell total coal produced. Also, we have to maintain the stock properly, so that we do not have to curtail production“, said the ministry’s official.[/su_pullquote]
But, the ministry’s decision of ramp up in production has put CIL in a trouble to fix storage of unsold coal and piling stock. This situation may rises owing to fall in demand from power producers, who are not producing enough because of growing losses.
However, now the company is in the situation to downsize its production as it can’t stock coal anymore since already having about 40 MnT unsold pithead stock to manage.
CIL produced 373.45 MnT of coal during Apr-Dec’15 with a growth of 9.1%. Off-take of the company also increased by 9.8% during the same period.
Rise in production resulted into increased stock at power plants. At present, coal stock is available for 25 days, which was about 11 days last year.
[su_quote]“To have a grip on current situation, price corrections may not be the immediate option. However, selling the additional output seems the only viable solution to achieve production growth”, said an official of CIL official.[/su_quote]
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