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While Coal India’s profit in the September quarter fell nearly 40 per cent, it also saw a record in output and sales.
Production rose 8.3 per cent to 113 million tonnes from the corresponding quarter a year before. Sales volume rose 13.6 per cent to 131.6 million tonnes. The performance, say company officials, had “never been seen in the recent past” and could also be the best ever.
During August and September, coal supplies to power plants grew by 20 per cent and 21 per cent, respectively, from the same months last year. Supplies to NTPC, the largest client, and its joint ventures grew nine per cent. The rise during the quarter was to 38.4 million tonnes, against 35.2 million tonnes during the same quarter last year.
“We stepped up production owing to high demand for thermal coal and improved average (rail) rake loading per day by seven per cent, besides despatching through road,” said a company official. Average daily loading of rakes in the quarter was 208.8, from 195.2 in July-September last year.
This was in the wake of thermal power generators facing a serious shortage in coal inventory, with the renewable and nuclear energy sectors also falling severely short of target. Growth in the hydro, nuclear, and other sources of energy fell by 12 per cent, 36 per cent and seven per cent, respectively. So, demand from thermal generators rose.
As against an average stock of 17 days (it ought to be 22 days) with thermal plants on September 30, 2016, power plants had an average stock of only six days on the same day of the current year.
Rupesh Sankhe, research analyst with Reliance Securities, concedes 13 per cent growth in offtake is significant, compared to the usual six to eight per cent. “However, this is on account of a low base in the similar quarter of 2016-17, when sales stood at 115.9 million tonnes,” he said.
It is expected that power demand will decline a bit as winter approaches and coal stocks to thermal generating stations will rise in the coming quarters. Coal India officials believe the momentum in offtake growth will be maintained in the coming quarters, although it might fall to eight to 10 per cent.
Yet, as mentioned earlier, the balance sheet disappointed the Street expectation. Sankhe says provisioning of ~2,396 crore for pay revision impacted the profits, which dipped 40 per cent. Average coal prices fell 1.9 per cent to ~1,331 a tonne; employee costs went up nine per cent.
“These factors, with changes in inventory stockpile, advance tax payment, and less dividend income from subsidiaries pulled down profits,” he said. Analysts expect Coal India to sustain production and sales volume growth, while improvement in financial performance is also expected.
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