E-auction realisation disappointed in Q1: Coal India's Rao

Coal India, the world's largest coal producer, disappointed on all parameters on Saturday with the first quarter net profit falling higher-than-expected 16.5 percent year-on-year to Rs 3,731 crore, led by lower realisation from e-auction sales.

Chairman and managing director, S Narsing Rao in an interview to CNBC-TV18 said that e-auction volumes remained flat but realisations slipped significantly to Rs 2,140 per tonne. Read This: Will Coal India, BHEL Q1 nos hinder mkt's pullback attempt? Rao further said production guidance will remain at 48 million tonne (MT). Though sales volume was up 2 percent (year-on-year) Y-o-Y, blended realization de-grew around 2 percent Y-o-Y, he added. Meanwhile, the firm marginally missed its output target for July by two percent, to 32.77 MT of dry-fuel during the month. The state-run firm, had set a production target of 33.44 MT for the month. Below is the verbatim transcript of his interview to CNBC-TV18 Q: Why was the average sales realisation lower? A: Even though there was 2 percent growth in volumes (sales), there has been a marginal decline in the realization. Our average sales realisations has been lower than last year by 2.5 percent. That is because entire incremental coal has really gone to the power sector and as you know we supply to the power sector under FSA at a notified price. Therefore the average sales realisation has been lower. So, is the case with e-auction. Unfortunately our realisation has been Rs 2,140 per tonne during this quarter compared to Rs 2,561 per tonne during last year first quarter. So, there was a decline of 16-17 percent. Q: What is your guidance for e-auction? A: No e-auction volume is more or less like last year that is a little over 13 million tones. For the year our guidance remains the same, about 48 million tonne for the entire year. However, we are not sure of what is going to be the trend for the balance three quarters in the realisation from e-auction. That depends on the international prices, grade mix and things like that. Q: Can you give us a brief on the performance of this year? A: July has been very good but May-June there was a disappointment, there was a negative growth. April we had good performance, May-June there was poor performance. So, overall it was almost flat; there was marginal increase in production but in the offtake there was some improvement. Again April was good but May-June was a disappointment. Overall there was only 2 percent growth. July has been very good but August-September if the monsoon etc permit, we should be able to show a good performance this quarter overall. Q: Has the demand of the product fallen as some of the consumers were not taking? A: No it is not a question of demand not being there but some of the consumers were not taking because there was adequate coal. But the flexibility like if some consumers are not taking to divert it to some other consumer is not easily available on account of place of availability, grade and also railway’s ability to divert this coal . Therefore, there was some pressure on our off-take in the month of May-June because of the consumers. Some of the consumers in some companies were not able to take coal. However, overall aggregate demand, there is no dearth of demand.