Maintain production target of 1 bn tonne by '19: Coal India

Coal India’s April-November production growth stands at 7.5 percent YoY and it has a consolidated cash balance at around Rs 59,000 crore.

Below is the transcript of Bipin Kumar Saxena’s interview with Nigel D’Souza and Reema Tendulkar on CNBC-TV18. Nigel: International prices have been moving lower so with regard to Coal India any price hikes, could we see it in FY15 or that is totally out of the window? A: I will not rule out the possibility because last time when the prices were revised that was in May 2013. Since then there has been an increase in the indices by around 9 percent. So, I don’t rule out the possibility but the Coal India board takes into account all those things before making any price rise. Coal India board is yet to take a call on that. Once it is taken then certain things will certainly come out in the market. Nigel: The international prices are sitting at five year lows so Coal India you still belief that there is scope for them to go ahead and increase prices and also is there a committee that needs to be formed to increase prices? A: This is done by the Coal India board. As far as the international prices are concerned, even today the basic price of international coal in the lower bands is much higher than the basic prices of Coal India. So, there is always a scope for it.

Reema: How soon is the Coal India board likely to consider a potential price hike and if yes what could be the extent of the fuel supply agreement (FSA) price hike according to you? A: I don’t think it will be proper for me to preempt it at this point of time. However, the audit committee and the board, they are regularly monitoring the same and whenever it is required, whenever the board meetings are held in the financial year this will certainly be on the agenda. Reema: The production in Coal India has been lagging for the last many years in fact I was seeing a report where from FY09 to FY14 it has only averaged about 2.8-3 percent thereabout. Are you on track to meet your FY15 production target of 507 million tonnes and if not how much are you likely to fall short by? A: If you see the figures up to November, there is a growth of 7.5 percent in the production in the year 2014-2015 compared to the previous year. There is a growth in production 7.5 percent and the offtake there is a growth of 4 percent. You will realise that production is one part; offtake is another important part because the coal has to move to various consumers. In fact the stock position as on today is around 34 million tonnes. So, we don’t have any problems of production or dispatch but the infrastructure and the railways also have to supply more rakes so that more coal moves to the power plants.

Nigel: Could you give us a rough idea of how much because currently your dispatches are lagging by 20 million tonnes. Can you make that up in the next three months that we have? A: Part of it can certainly be made up but then it again depends on the availability of the rakes. We have explored a number of schemes where we are offering coal to the consumers directly from the pithead. Consumers have been lifting that coal but then rail is a big component where the rake supply has to enhance for making up the short fall. Part of it will be certainly made up.Nigel: What is the current rake availability, what is the required rake availability and also to meet this particular target what is the rake availability you are looking at? A: We had projected a rake requirement of almost 232-235 rakes per day. On an average we are getting around 210-215 rakes per day. So, that calls for additional 15-20 rakes per day so that we can move the coal to the power plants. With the incoming of winter the fog problem has also started where the movement of rakes has been affected to a certain extent. Reema: What about e-auction volumes, is it likely that the volumes could be under pressure either from the government or maybe on account of weak demand, what is the company forecasting e-auction volumes to be? A: E-auction if I say during the monsoons the stocks of the power plants had gone down drastically to a level of 7-8 million tonnes. So, certain amount of balancing was required where more coal was to be supplied to the power sector. Now the stocks have come up to a level of 12 million tonnes and we are making the first offer to the power sector so that whatever coal power sector wants to lift, lift. Once it is not lifted by the power sector that coal is always made available for the e-auction.