Will meet targets, customers to pay import cost: Coal India

In an interview to CNBC-TV18 immediately after announcement of  results, Coal India, CMD, S Narsing Rao says that he is confident that the PSU will meet its production targets. He adds that the customers will pay for the cost of importing coal. Rao explains that of the 49 thermal power stations eligible to sign FSAs, only 14 have signed.

Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: The results have been good with a healthy top-line What kind of blended realisations did you get in this particular quarter?
A: I am referring to the whole year. These are consolidated results. Q: What kind of realisations have you posted for the quarter?
A: No. We have posted a  net sales of Rs 62,415 for the whole year. Q: On a per tonne basis, what have you realised with regard to your coal sales?
A: It is close to 1,500 per tonne. Q: Could you give us a break-up of what kind of realisations you have been able to post in this particular quarter?
A: We have realised an average of about 2,400 per tonne. Q: On a sequential basis, the e-auction realisation has fallen down to around 2,400. Could you give us comparison on sequential basis?
A: The e-auction is a kind of a real price discovery based on demand and supply whereas normal sales are more of a costless kind of pricing Coal India follows in the case of power sector. Q: The margins have been hit primarily due to the higher employee-costs. For the next quarter, how much will you factor employee cost?
A: In the year 2011-12, the revised wage cost was applicable only for nine months because it was effective from July 1 and came to about Rs 6,500 crore. We expect it to be closer to Rs 7,000 crore per annum for the next four years. Q: If you have to break up this Rs 9,000 crore, could you tell us how much is the additional cost that you have incurred in this particular quarter?
A: Last year, for nine months, it was about Rs 6,400 crore. Q: Your other income shows a rise of nearly 57%. What kind of cash balances do you have right now?
A: This is because of an accounting blip as the Rs 5,000 crore is income from interest and the balance Rs 2,500 crore is from the operations. What we charge the customers for surface transport charges should technically be separated, but be part of the normal revenue itself. Q: How many FSAs have been signed and how many could get signed in the near future?
A: According the Central Electricity Authority's supply list, 49 thermal power stations are eligible to sign FSAs. However a pre-requisite mandates the signing of a PPA with a discount. So far 14 have signed and are drawing coal. I have no idea about the balance 35. Q: In the event of the all the 49 FSAs being signed, what would be the additional coal requirement that Coal India would have to make available?
A: For the current year, our plan is to increase output by 30 million tones, but there will be still a shortfall of about 15-20 million tonne. The total requirement has been pegged at about 50 million tonne. Q: In case of a short-fall, you indicated about importing coal. If the need for import arises, who exactly will bear the cost?
A: If the consumers expect us to import, they will bear the cost. There is no question of any cross-subsidisation on that count. Q: What is your production target for this year and what is the possibility of achieving it considering targets were not meet for the past two years?
A: Our production target for this year is 464 million tonne and we are confident, barring inclement weather, of achieving the target. As of today we have registered growth of about 5.9% against 6.4%-6.5% that was expected.