Chinks open in Coal India's near monopoly

State behemoth's hegemony is unlikely to reduce significantly for quite a while

Recently, faced with stagnated demand from the power sector, its key customer, Coal India has been using the auction route to clear its stock and earn better margins. During April-December, the company sold 64.7 million tonnes via the e-auction route, 41 per cent higher than what it sold during the same months of the previous financial year. However, sales volume from long-term fuel supply agreements dipped by 4.5 per cent to 313.5 mt in the same period.

Interestingly, while e-auction sales comprised 12 per cent of the total sales portfolio during the nine months ending December 2015, it rose to 16.5 per cent during the first three quarters of the current financial year.

“Coal India’s dependence on e-auction is increasing and will go up in the coming days. It will be interesting to see how the company fights it out with private players later on the e-auction front,” an analyst said.

The company is also focusing on better quality and control grade slippage. Company officials and analysts say opine it will take four to five years at least for private companies to commence operations after the blocks for commercial mining are allotted. So, Coal India will have ample scope to correct itself and maintain hegemony.