CIL to maintain output rate

KOLKATA: Coal India Ltd (CIL) may be reeling under staggering volumes of stockpile of the order of 34 million tonnes at its mines. But it has decided against cutting down production for 2006-07.

For the moment, it has decided to go ahead with its targeted production of 363 million tonnes for 2006-07, and stick to its extraction schedule of mining 384 million tonnes

in 2007-08, despite the large inventory position. “Currently, we are extracting about 1.3 million tonnes of coal every day — between 60-70,000 tonnes of which are piling up every day,” CIL chairman P Bhattacharyya told reporters in Kolkata on Tuesday.

Stating that the company had 34 million tonnes of stock built-up till date, Mr Bhattacharyya said the stockpile had resulted from power companies not lifting coal as projected and problems in movement.

“CIL extracted 343 million tonnes of coal in 2005-06, and fixed a target of 363 million tonnes for 2006-07 — an additional production of 20 million tonnes. The additional production was arrived at on the basis of projected increase in demand from the power sector. This, however, did not materialise and the power sector lifted an additional amount of 2 million tonnes till February 2007, leading to an excess supply situation of 18 million tonnes for the sector,” said Mr Bhattacharyya.

He said talks have been initiated with the coal and the power ministry for lifting of coal and they are looking into it. Constraints in coal movement has also led to the stockpile.

Mr Bhattacharyya, however, said CL would go ahead with its target production of 384 million tonnes in the next fiscal since power capacities were to be added and the railways has decided to increase wagon capacity.

On CIL’s financial performance, Mr Bhattacharyya said the company’s profit this fiscal would be less than that of the previous year. CIL had posted a profit before tax of Rs 8,676 crore during 2005-06. This year’s PBT has been pegged at Rs 7,800 crore which CIL is hopeful of achieving. CIL has, in fact, revised its PBT figure downwards from Rs 8,000 crore to Rs 7,800 crore during October-November.

The fall in PBT will be due to rise in input costs which CIL had been unable to pass on to its consumers because coal prices are tariffed. Discontinuity of e-marketing of coal will also affect PBT. “Last year CIL earned about Rs 1,000 crore from e-marketing. This year the figure is likely to be about Rs 600 crore. We will also have to make some provisions for the National Coal Wage Agreement - 7 (NCWA-7) that be negotiated now, because the tenure of NCWA-6 is nearing its end,” said Mr Bhattacharya. Incidentally, he said, CIL would pay an interim dividend of Rs 1,500 crore to the government.