Coal sales via the auction route provide subsidiaries of Coal India Ltd (CIL) an opportunity to garner additional revenue and liquidate any excess stock in hand. However, the case of Central Coalfields (CCL) tells a different narrative.
Unlike the other subsidiaries of CIL, CCL had commenced the new fiscal with reduced inventory of 10.56 million tonnes (mn t) against 13.3 mn t recorded in the previous fiscal. Besides, healthier coal demand helped inventory levels to liquidate faster which further came down to 6.37 mn t at the end of May ’21.
Eventually, the company decided to stay away from offering coal in the auctions for the first two months of FY ’22. In contrast, bulk volumes of 21.7 mn t of coal had been put up for sale via the auction route in the corresponding period of the previous fiscal.
It was only in Jun ’21, sales resumed with spot auctions to cater to the coal requirement of the customers. In fact, it was the first spot auction held by the company after a gap of three months.
Auction receives good response
In the latest round of auctions, the company offered a total of 1,376,500 tonnes (t) of coal via the spot auction on 7 and 18 Jun ’21, of which 48% of the material was booked.
Notably, this was the highest allocation against the offered volume seen in monthly spot auctions since Apr ’20.
Unlike its counterpart, Bharat Coking Coal Ltd (BCCL), CCL had kept 10% as the upper cap for fixing the reserve price, which helped the company to record higher sales in the auctions.
Grade-wise Auction Summary
The entire 68,000 t of coking coal, across grades, was sold in the auctions which were offered at a comparatively lower reserve price than that of BCCL’s. Also, the non-coking coal grades were sold at a high premium over the notified price.
Moreover, the company also managed to fetch competitive prices for the coal by-products. Interestingly, reject coal from Rajrappa colliery garnered the highest premium of 294% among the various lots being offered for sale.
Overall, the booked quantity was sold at a price realisation of INR 1,720.79/t, which was 25% higher than the assessed notified price of 1,372.67/t.
In order to further bolster auction sales, CCL came out with two more auctions during the month. In the first, a total of 555,000 t of coal was put up for sale via an exclusive auction on 28 Jun ’21. Following this, the first phase of the special spot auction was initiated wherein 1,722,500 t was offered on 29 Jun ’21.
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