Government allowed Coal India to revert to the old system, removing the cap on e-auction volumes with effect from April 2015 which might boost the state-owned miner's bottom line going ahead.
Speaking to CNBC-TV18, Bipin K Saxena, Director-Marketing, CIL said the company is looking to sell more coal via the e-auction route. The company is expected to sell 50-55 million tonnes (mt) in FY16 and is targeting 10 percent total sales via e-auction route.
The miner is confident of achieving production target of 550 mt for the current year. It also has a production target of 910 mt by 2019-2020. The company got an average of 195 rakes per day in FY15 and is confident of getting over 230 rakes per day in FY16.
Below is verbatim transcript of the interview:
Q: How should we read the April 1 notification issued by the ministry of coal, do you get to auction more?
A: We will certainly be auctioning more. During the restricted period the auction was comparatively less. Now, we will be able to auction more of coal and based on the production, as production goes up, we will also grow up to a limit of 10-11 percent.
Q: How much will the production go up by the end of FY16 and by how much will your e-auction sales volume rise?
A: In FY16 we have planned to produce around 550 million tonne of coal. The auction volume will remain somewhere 50-55 million tonne and that will depend on the production growth every month or you can say quarterly basis how does it grow and then the action will be taken accordingly.
Q: The MoU that you have with the government was 507 million tonne for the year that just ended and you actually produced 494 million tonne which is a very good number but not quite target. Around 550 million tonne is a tall task, isn’t it? You think there can be more than 10 percent or almost a 10 percent increase in output in one year?
A: Last year we faced certain problems which we have addressed more or less this year. We are very confident that we will achieve this 550 million tonne.
Q: What are these problems?
A: Last year we had some overburden (OB) outsourcing contracts failure in Northern Coalfields (NCL). There was two days of strike in the month of January that caused a loss of around 2.5-3 million tonne.
There was some problem of ESM agencies in the first half of the year in South Eastern Coalfields (SECL); that has been addressed to a large extent. So, all these things taken together they will certainly enhance the production and we are confident we will reach the level of 550 million tonne.
Q: You did mention that 10 percent of this would be done through the e-auction route so that would be about 50-55 million tonne. How much would that help increase your profitability?
A: Profitability I can’t say because as of now, last year the appreciation was almost 60 percent of the notified price what we got from the market. Since this is a market total, market driven price so market driven price you can’t preempt what will be the future. However, last year we got around 60 percent appreciation over the notified price in terms e-auction only.
Q: You are poised for some output increases in some of your subsidiaries. Can you take us through some of them; I think Western Coalfields is going to see some 15 mines getting opened?
A: Western Coalfields this year has planned to produce around 45.1 million tonne in 2015-16. This year in 2014-15 they have produced around 41.15 million tonne. So, this is because of the opening of the new mines and certain permissions coming in which will certainly enhance the production.
Q: You did mention that your FY16 target is 550 million tonne. Can you give us a slightly longer target, say in the next two-three years what will be the Coal India production that one can look forward to?
A: In 2016-17, we are looking for 599 million tonne. Maybe in 2017-18 we are looking for something around 663 million tonne. By the end of 2019-20 it will be something around 910 million tonne as of now. However, this will change depending on the situation. As of now what we have planned is from the mines that are coming up, something around 910 million tonne by 2019-20.
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