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Coal India Ltd (CIL)'s e-auction sales in the first quarter of the current financial year has once again reached 16 million tonnes (mt), which is over 12 per cent of its April-June quarter's total offtake. The trend is likely to continue throughout the financial year and the miner might register record e-auction sales in the current year.
CIL recorded an offtake of 129.39 mt in the first quarter of 2015-16, registering an 8 per cent growth. Production in the first three months of the current financial year increased by 12 per cent at 121.35 million tonnes (mt) as against 108.32 mt in the same period last year.
“E-auction volume was 16 mt, while realisation from e-auction sales was at Rs 3,494 crore,” said an official.
Incidentally, in the corresponding quarter of the last financial year too CIL clocked e-auction sales of 16.78 mt. Against a total offtake of 119.60 mt in the first quarter of 2014-15, CIL's e-auction volume was about 14 per cent of the sales.
However, in September 2014, Coal Minister Piyush Goyal directed CIL to pare e-auctions by about 50 per cent to 25 mt in 2014-15 from 58 mt last year. After initially opposing the proposal, CIL finally settled for keeping its e-auction sales to seven per cent of the total sales.
As a result, CIL ended FY15 selling about 45 mt coal through e-auction.
Later, the ministry has allowed CIL to revert to the old system, removing the cap on e-auction volumes with effect from April 2015. Thus, CIL was again allowed to increase e-auction volumes to 10 per cent of total sales, which is the standard practice.
“In the absence of cap, there is no hard and fast rule. It has gone beyond 12 per cent earlier as well. But yes, CIL's first priority is to supply coal to the power sector. With an remarkable improvement in output, we were in a position to sell 16 mt via e-auction in the first quarter,” said an official.
According to CIL officials, this trend is likely to continue and the e-auction volume is “likely to be at the same level throughout the year".
In that case, if CIL meets its offtake target of 550 mt in the current financial year, CIL's e-auction volume at 12 per cent of sales will be at 66 mt.
Besides, the coal ministry has recently said CIL for the first time will start selling coal through e-auction windows to power plants not having fuel supply agreements (FSA).
Initially about 10 mt is likely to be sold in this separate window. This may be over and above the existing e-auction volume.
CIL's profitability to a large extent is dependent on the realisation from e-auction. While a small part of overall volumes, e-action sales contribute 35-40 per cent of total Ebitda (earnings before interest, taxes, depreciation and amortization). Hence, higher e-auction volumes would mean higher profitability in the coming quarters.
