Coal India's FY20 Output Seen at 600-610 Million Tonnes
By Debjoy Sengupta
March 4, 2020 - Coal India is likely to produce 600-610 million tonnes and sell 590-600 million tonnes this year, about the same as last year, company executives said.
The company needs to raise output by 400 million tonnes to meet its target of 1 billion tonnes by 2024. This requires its compounded annual growth rate to accelerate to 14% from the much slower 3.1% it achieved in the past four years.
“This would be a mammoth task, requiring extensive planning and synchronisation by Coal India and various central and state departments including railways. The company will also require speedy environment and forest clearances to enhance production and meet targets,” a Coal India executive said.
This year till February, it produced 517 million tonnes and sold 528 million tonnes, falling 1.9% and 3.7% respectively from the previous corresponding period. Executives expect production in March to be 80-90 million tonnes while sales would be 60-65 million tonnes.
“Production was affected by law and order issues at subsidiaries and unseasonal heavy rains at a large number of mining locations. Sales were affected by less than anticipated growth in power demand—a sector which constitutes bulk of Coal India’s supplies,” the executive said.
According to India Ratings & Research, power demand in April-January rose only 1.3% from the previous corresponding period, compared with initial projections of rising 4-4.5%.
In January, energy demand increased 3.5% after declining for five consecutive months. With demand picking up, coal sales are expected to rise in March, helping the company liquidate additional stocks, enhance production and sales.
Between December 2019 and February 2020, Coal India managed to increase production as the weather and demand for power rose. Coal stock at pitheads at end of February was 43.66 million tonnes, almost 25% more than the previous corresponding period.
Stocks at power plants were enough for 21 days on an average at 37 million tonnes, almost 45% more than the previous year.
Top soils at collieries need to be removed to expose coal for future production. In February, the company increased top soil removal by almost 12%, preparing for increased production in the subsequent months.