Will need only 5-6 mt imported coal for FY14: Coal India

In an interview to CNBC-TV18, S Narsing Rao, chairman and managing director, Coal India says the company will require only 5-6 million tonne of coal to be imported in order to provide fuel to the existing power plants.

This comes as a positive development as the company had earlier guided that they would need about 35 million tonne of coal for FY14. Also read: China, Indian suitors eye bids for Rio Australia coal mines 
"It looks like some of the power plants, which were expected to come on stream, may not be happening. Therefore as of now, we are okay, we have been able to supply close to 90 percent," he says in an interview to CNBC-TV18.

Below is the edited transcript of Rao's interview to CNBC-TV18. Q: Yesterday we heard reports that Coal India okayed fuel supply agreements (FSA) renewable with non-power consumers like cement perhaps, but you had some riders. Could you give us some details on whether you did sign them and what were the riders?
A: The non-power FSA is a routine thing. It is not very significant. At the end of April, the tenure of those non-power FSAs was five years, which was coming to a close at the end of April 2013. The board debated on that and some issues were still to be resolved. We did not take a final decision at that time. We extended it by three months initially and in the meanwhile we looked into it in all aspects and finally we have extended them for five more years.
There are not many significant riders or anything, this is all other than power; captive power, sponge iron, cements etc, this is about 57 million tonne we supply to those categories. Q: Will any imports be required in FY14 itself to provide your commitments to existing FSAs. If yes, what will be the quantity of imports required?
A: As per our projection, whatever power plants were supposed to come to stream during the year, there would have been a shortfall of about 35 million tonne of coal for the current year. However, it looks like some of the power plants which were expected to come on stream may not be happening. Therefore as of now, we are okay, we have been able to supply close to 90 percent.
Any shortfall below 80 percent of the annual contract quantity would be required to supply in the current year from import source. However, as of now 5-6 million tonne is our estimate.
We will certainly wait for some more time. The demand for coal would be up during Q3 and Q4 where the generation will be in full stream, before that, we will tie up our exact requirements and accordingly we will be placing order from our suppliers. Q: You have also scheduled a board meeting later this week with respect to an international acquisition, any details what Coal India will be looking to acquire or what would fit in the company strategy?
A: I do not think I can give much detail on that except that there are three specific proposals coming up before the boards of committee- foreign acquisition committee, today. Of course, all three are coincidentally in Australia, but materializing depends on various factors, so one cannot say whether it will happen or not.
_PAGEBREAK_ Q: We keep hearing a lot of two way noises with respect to divestment by the government of India, sometimes it is with respect to labour issues etc. Could you give us some update on what is happening on the divestment front?
A: At the moment, we don not have anything more than what has been talked about or has appeared in the press about further status of divestment proposal. Q: Production and dispatch targets are being marginally missed by your company but the misses by Mahanadi Coalfields Limited (MCL) and Singareni Collieries Company Ltd (SCCL) targets are sometimes quite large, aren’t they?
A: There has been some problem in the month of May. Infact in April our growth was fairly okay- 5.8 percent against asking rate of about 6 percent. So, we were quite satisfied with April. However, May has been a disappointment particularly because intense heat waves across the coalfields have affected us badly. That was a single most reason, as in the full month of May we has five hour closure or six hour closure in Orissa because of heat wave and we lost some production in off take. Additionally, there have been some problems in south eastern.
We have had a significant negative growth in the month of May from Eastern Coalfields, Mahanadi and south eastern. Things have been improving. Now in June, things are better but we certainly still need to go up. For example, our aggregate growth rate today is close to about 2 percent against 6 percent asking rate. So, we need to step up in the period to come. Q: Have dispatches improved?
A: As of now I can only say overall we are getting the rakes that we need. There maybe a  little bit of disruptions in one-two coalfields here and there but overall, there is no issue from the rake availability side. There are issues only from our side in terms of transporting and loading. We need to improve that. Q: On international coal pricing has been falling. Your e-auction volumes also and realisations are under threat perhaps?
A: May not be significantly. We will take a call at the end of the current quarter. End of June we will look at that, but there is little we can do about e-auction. It is basically demand supply situation and it also a function of international prices and our quality etc. We are not much worried about the e-auction part of it.