Jun 06, 2012, 05.07 PM | Source: PTI
State-run Coal India should focus on raising production rather than on improving profits, former coal secretary Alok Perti, who demitted office just a week ago, said today.
"Improvement is required in the CIL management. They need to focus on production to meet the power sector need. Instead, they are only looking at margins. That's a private company to do," Perti said at an Assocham event here.
"In a monopolistic situation, is profit for a government firm only objective? I think it can not be so. Unfortunately, for the last few months, it is giving that kind of projection only. It needs to change," he added.
CIL accounts for about 80% of the country's coal production. The output of the maharatna firm remained stagnant for the last two years which is often attributed to lack of forest and environment clearances. Last year, its production was 431 million tonnes.
Perti had been working in the coal ministry since 2009 and was promoted as secretary in September last year. He has been appointed as an advisor now.
He also attacked the laid back approach of the management of state-run firm, saying that the initial public offering of the company in 2010 was supposed to bring in a change in the attitude of the management, but that did not happen.
"We at one stage, when we brought the IPO of CIL got the feeling that this is going to usher in a better management and we thought that for quarterly reports, etc, the Board would be more professionalised. What we find there is not exactly so and that is where I think that Coal India needs to modify for change," Perti said.
Government had in April issued a Presidential directive to CIL for signing fuel supply agreements (FSAs) with power producers assuring them of at least 80% of the committed coal delivery.
However, that did not gel well with UK-based hedge firm TCI, which is the biggest foreign investor in Coal India and has a minority stake in it. It accused CIL of not protecting minority shareholders' interest and harming the company by not opposing to such fuel supply pacts.
"TCI has a point. But, CIL should focus that good value comes through production and not by increasing prices," Perti said, adding CIL has rooms for lowering its production cost.
Coal India stock price
On June 24, 2016, Coal India closed at Rs 311.45, down Rs 6, or 1.89 percent. The 52-week high of the share was Rs 447.25 and the 52-week low was Rs 272.05.
The company's trailing 12-month (TTM) EPS was at Rs 25.87 per share as per the quarter ended March 2016. The stock's price-to-earnings (P/E) ratio was 12.04. The latest book value of the company is Rs 52.37 per share. At current value, the price-to-book value of the company is 5.95.
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The secretary further said at present there are no