 "Coal stocks and low demand affects production in Coal India")
Senior officials at the company said the coal stocks have climbed up to 47 million tonne (mt) in February-end from the erstwhile 40 mt during December last year. With the stock piling up in the backdrop of subdued demand from the power, steel and cement sectors, stock clearance and increasing offtake is the priority now.
"The demand for coal is low at this moment and the stock has increased. We need to clear the stock soon", a senior Coal India official told Business Standard.
Coal, if stocked over a period of time starts losing its quality which directly affects its selling price. Also, a higher stock implies lesser storage space for the recently mined coal.
Besides, evacuation of coal has also been a constraining factor limiting the mining potential of this behemoth.
"Evacuation will be addressed over a period of time and work to construct the necessary railway lines has already begun", the official said.
Since November last year, Coal India has been repeatedly missing its offtake target while post December, targets on the production front have been missed.
During August-October, against the total production of 117.75 mt, the coal colossus firm was able to sell 125.44 mt of coal thereby surpassing its target by nearly two percent.
However, things changed since December last year when production was overachieved but offtake fell by three percent at 48.16 mt. That following month, coal minister Piyush Goyal raised concerns over about 40 mt of the fossil fuel's stocks lying idle with Coal India and considered even lowering coal prices to clear off the stock.
In January, Coal India had strategically met just 94 per cent of its target of 56.18 mt of coal posting a 95 per cent achievement in its offtake. The very next month, the Maharatna miner comparatively met with greater success to touch 51.01 mt (against 52.01 mt target) in production while offtake stood at 45.53 mt.
Nevertheless, the stock of the black mineral also climbed higher by 17.5 per cent in December-February period.
Under such adverse conditions, failure to meet the target can actually help Coal India maintain market stability as lower production in face of low demand seems the right way to balance things out.
At this pace, with just one month to go to end the current fiscal year, Coal India needs to overachieve its production target for March by atleast 26 per cent at 66.34 mt to fullfill the 550 mt targeted production for 2015-16.
However, it doesn't seem possible at the current pace and the given market conditions.
Apart from the subdued need for coal to fuel the furnaces of the power, steel and cement plants across the country, the Talcher minefields (in Odisha) under Mahanadi Coalfields - a Coal India subsidiary - is facing trade unionism related issues.
These mines contribute to about 90 mt of high quality coal each month but frequent strikes and related labourer militancy has rendered these mines to produce 95-96 per cent of the targets each month.
In this situation, at best, Coal India will be able to close this fiscal year at 540 mt against the targeted 550 mt.
