Coal India misses 2014-15 production target, but clocks 8.6% growth

Although Coal India (CIL) missed its production target for 2014-15 by nearly 2.5 per cent at 536.5 million tonnes (mt), the company registered an output growth of 8.6 per cent compared with 2013-14. Its offtake, under tapered demand for coal, also rose 8.8 per cent during the year ended March 31, 2015.

Coal minister Piyush Goyal tweeted the growth to be the highest ever in “almost three decades”.

“There were hurdles related to evacuation and the monsoon had also played a spoilsport, but surpassing 500 mt of output itself is a big achievement”, said a senior Coal India official.

CIL’s core subsidiaries Mahanadi Coalfields (MCL) and South-Eastern Coalfields Ltd (SECL) missed their targets as evacuation, stocks and low demand problems arose.  Against the target of 150 mt, MCL could produce 138 mt, signifying a 12 mt shortfall while the high-grade coal producing SECL fell short of its 137 mt target by 1.5 mt.

“There is poor demand from power plants in Rajasthan and Gujarat, where SECL’s coal is mostly sent,” said the official adding 12 mt coal stocks have piled up in this subsidiary.  As on April 1, total unsold coal stocks have rocketed by another four mt to touch 57 mt in wake of poor demand from power, cement and other companies. Eighty per cent of Coal India’s coal is shipped to the state-owned power units across the country.

Goyal had offered 14 mt of fossil fuel under special e-auction to both power and non-power sectors to facilitate liquidation of pit-head stock, from which 86 per cent was cleared. However, as production scaled up again in the face of poor demand from power companies, the stocks situation went back to square one.

Besides, Coal India is also yet to reap major benefits from the ambitious Ujjwal Discom Assurance Yojana (UDAY) scheme. Bonds worth Rs 1 lakh crore under this scheme was issued in the last financial year.

“Unless the demand for power picks up well, the stocks may idle and may increase further,” said the official.

Nevertheless, even though Coal India managed to register a 8.6% surge in its production, the company, for the fourth consecutive year in succession was rated as Excellent in its overall performance for 2014-15 by Department of Public Enterprises (DPE) under the Heavy Industries & Public Enterprises ministry.

The key parameters which were considered for the rating are sales turnover, gross operating margin rate, financial ratios, customer satisfaction, project management & implementation, coal production, off-take, productivity, safety and human resource development measures.

Key officials in Coal India are expecting a future production target between 590-610 mt to be given by Goyal for 2016-17.