Coal India has reported a better than expected offtake in August. It produced 36.21 million tonne in August against a target of 37.65 MT. Bipin Kumar Saxena, director marketing, Coal India, says the year-end production target continues to be 550 million tonne.
However, this will require production to be around 49 million tonne per month. Saxena says the production run rate will increase post the monsoon season.
Below is the verbatim transcript of Bipin Kumar Saxena's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.
Anuj: Can you take us through the production in sales numbers for August which have been a bit of an improvement compared to July?
A: In the month of August, the production was around 36.1 million tonne against a target of 37.6 million tonne. If we take it on a year-on-year (Y-o-Y) basis from April to August, against 196 million tonne we have produced around 192 million tonne of coal i.e. around 98 percent.
Anuj: With respect to output, has strip ratio increased beyond your expectation? Do you still maintain 550 million tonne target in terms of production target?
A: We still maintain production level of 550 million tonne for the year. The stripping ratio has slightly increased. If you notice, the growth in the overburden, this year, has been comparatively more, in fact the absolute figure shows that there is almost 34 percent growth in the overburden removal this year.
Ekta: To get to the targeted 550 million tonne we will have to see a run rate of 48-50 millon tonne per month. From which month will this be likely?
A: That will be after the monsoons only and maybe from December onwards and so on.
Ekta: What is your sense about railway rake availability?
A: In August rake requirement loading plan was around 218. Against that we loaded around195 rakes. If you compare with the previous figure of August 2014, it was 178. So, there was a growth of almost 16-17 rakes over the last year vis-à-vis the target of around 218 rakes which we had planned during the monsoon.
Anuj: What is the premium on e-auction sales currently?
A: It is around 36-40 percent; somewhere varying between that.
Anuj: The ministry has recommended on the need to rationalise Coal India’s contract prices based on calorific value. Could this translate into 3.6 percent hike in lower grade coal prices but also lead to a 10 percent cut in higher grade prices?
A: I don’t think it will be proper for me to comment at this point of time because pricing is one part where the board takes a call; it takes all the pros and cons and examines all the aspects. So, when the right time comes board will take a call on that.
Ekta: What about the potential price increases on fuel supply agreements (FSA)?
A: Let the board take a call on when the correction has to be done and what is to be done. However, with respect to international prices, in the lower band there is a discount of 35-40 percent.
Ekta: Diesel prices have come down in this quarter, what is the outlook on margin expansion?
A: It should certainly but then the diesel prices keep on varying and they keep on changing very frequently. So, I don’t think it will be possible for me to preempt at this point of time.
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