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Dec 02, 2012, 12.02 PM IST | Source: CNBC-TV18

Coal India Board to discuss price pooling in Dec meet

Coal India Board is likely to meet on December 12 to discuss the issue of coal price pooling. In a meeting held in August, the CIL Board could not reach a consensus on price pooling mechanism and had also asked the management to come up with a business model to boost price pooling.

Coal India Board is likely to meet on December 12 to discuss the issue of coal price pooling. In a meeting held in August, the CIL Board could not reach a consensus on price pooling mechanism and had also asked the management to come up with a workable business model for the same.

To offset the impact of high import costs, the Planning Commission had asked CIL to adopt a pooling formula on prices by combining rates of imported and domestic coal.

Price pooling is a mechanism to implement fuel supply agreement that the state run miner has signed with power companies to supply coal. If it is approved then 15 per cent supply of imported coal will be not in the cost plus method, but in pooling mechanism

CIL Board had approved the modified   FSA with 65 per cent domestic coal and cost plus for 15 per cent imported coal supply to meet 80 per cent assured supply of the contracted quantity to power companies.
If price pooling is implemented, power consumers will have to bear the impact, but it will be neutral to CIL.

Meanwhile, CIL and Central Electricity Authority (CEA) are jointly working on price pooling mechanism and will submit the report to Power Ministry for consideration.

However, West Bengal and Odisha governments haves expressed reservation on the proposed mechanism by stating that the pooling mechanism is irrelevant to power companies located very close to coal mines.

 

Coal India stock price

On December 19, 2014, Coal India closed at Rs 376.55, up Rs 9.15, or 2.49 percent. The 52-week high of the share was Rs 423.85 and the 52-week low was Rs 240.50.


The company's trailing 12-month (TTM) EPS was at Rs 21.06 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 17.88. The latest book value of the company is Rs 26.04 per share. At current value, the price-to-book value of the company is 14.46.

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