CIL revenue from e-auction may surge 23% in April – December

18 December 2017

State-run Coal IndiaBSE 3.02 % is expected to report a 23% year-onyear jump in revenue from e-auctions for the April-December period, boosted by better margins as China’s rising demand and lower supply from Indonesia tightened global supply.

Company executives have pegged the nine-month revenue from eauctions at Rs 12,000 crore, saying it will help Coal India meet higher costs, particularly the Rs 5,600 crore extra outgo on account of a 20% hike in workers’ salaries.

This year, the company is expected to sell about 70 million tonnes of coal at e-auctions in the April-December 2017 period at an average realisation of least at Rs 1,600 per tonne, they said. In the year-ago period, the company had sold about 64.71 million tonnes at an average realisation of Rs 1,502 per tonne.

“We hope to sell close to 100 million tonnes through e-auctions during 2017-18,” a Coal India executive said, requesting not to be named.

Average realisation from e-auctions rose in tandem with rising international prices. In the second quarter, average realisation was Rs 1,614 per tonne, 20% more than the Rs 1,337 per tonne in the previous corresponding period.

In the third quarter of the current fiscal, Coal India has already crossed Rs 1,650 per tonne and is expected to touch Rs 1,700 per tonne by the end of December, compared with Rs 1,500 per tonne a year ago.

“Higher realisations for e-auction help Coal India achieve a better bottomline compared with coal sold to the power sector, which is at a predetermined price,” the executive said. “This year, between April and September, Coal India sold close to 51 million tonnes through eauctions at an average price of Rs 1,600 per tonne, earning around Rs 8,160 crore – a near 41% rise against the previous corresponding period. Last year, during the same period Coal India had sold around 40 million tonnes at an average realisation of Rs 1,463 per tonne, earning Rs 5,780 crore.”

An expert from McCloskey Coal said Chinese demand for coal is expected to remain firm this winter, which would exert an upward pressure on international coal prices as well as domestic e-auction prices. Over the last few months, rains in Indonesia have reduced production as well as availability. This, coupled with firm demand from China, led to coal prices in the international market rising at a steady pace.

Jayanta Roy, senior vice-president at ICRABSE -1.65 %, said, “In the international arena, both Indonesian and South African coal prices have firmed up over the last few months. Coupled with this was a domestic coal availability crisis in the power sector, forcing Coal India to concentrate on sending more coal to them. This temporarily reduced availability of e-auction coal, thus raising its prices over the last few months. As more coal is expected to be sent to power plants till their inventory reaches a comfortable level, availability of e-auction coal will continue to exert upwards pressure on prices.”

Source: ET