Coal India misses production, offtake targets as stocks mount

Coal India Ltd missed both its output and off take target in April 2016, even as overall coal despatch, as well as those to power utilities dropped on a year-on-year basis. Coal India is in a production logjam, a company statement said.

Despatch dropped by 1.06 million tons to 42.5 million tonne in April last year, indicating less coal demand, a company statement said.

Hinting at a slowdown in production, the company said that all subsidiaries are geared up to take up the coal production to higher levels but the stock accumulating at their pitheads is a major constraining factor which is not permitting them to produce further.

“Ramping up the coal production would not be a problem to CIL because Over Burden Removal (OBR) was at an all time high during 2015-16 with 265.63 million cubic metres more than the previous fiscal. With coal ready for mining on the shelf, CIL would be able to pick up the production tempo once the demand for coal picks up. That is how coal is exposed so that the entire machinery can be deployed to extract coal to match the demand.

The production logjam is expected to break once the ground-stock reduces and the demand perks up, the statement said.

Power utilities are sitting over around 36 million tonne of coal ending April 2016 against 29 million tonne last year. The current coal stock accretion at the power utilities is the highest in four years.

Accumulating coal stocks is risky as they are combustible, pose an environmental hazard (being dusty) and lose quality if left exposed for long. CIL’s stocks now stand at 55.3 million tons against 57.7 million that it opened the year with. It has been able to liquidate stocks through e-auction.