Coal India Ltd’s (CIL) total outstanding from power generating companies (gencos) has come down by nearly 43 per cent to ₹12,000 crore as at end October. The total dues (from State gencos and central undertakings), which were estimated to be close to ₹19,000 crore at the beginning of this fiscal, had spiked up to ₹21,000 crore in August-September of the fiscal.
Supply curtailment
It is to be noted that the non-payment of dues had led to supply curtailments by coal companies leading to low coal stock positions in States such as Uttar Pradesh, Maharashtra, Rajasthan, Madhya Pradesh and Punjab. A number of these States had also been reporting load shedding as many projects were under outage due to a lack of coal.
In early October this year, coal stock at a number of thermal power plants were at critically low levels with as many as 107 stations having three days’ stock left as on October 3. This is against only around 15 plants in critical/super critical stock position (holding less than six days’ stock) a year earlier (as on October 3, 2020).
Inadequate supplies
The low coal stock at power plants was mainly attributed to a sudden spike in electricity demand on the back of a revival in economy. Heavy rains during the peak producing months of August-September impacted production and despatch of coal as well.
Non-payment of coal dues from States also resulted in inadequate supplies, industry insiders said.
According to Pramod Agarwal, Chairman and Managing Director, CIL, receivables increased during the pandemic because electricity was being supplied, but they (discoms) were not getting paid at all. This in turn affected their payment to gencos. However, CIL has been trying to control the receivables from the gencos, and has been able to reduce it to ₹12,000 crore. It is hopeful of bringing down the receivables further moving forward.
Reducing receivables
“If something like the pandemic happens again and everything is shut down, one cannot say what will happen. But because there a is shortage of coal, receivables will not increase. We will use this as an opportunity to get money. There is demand from many people and so we say that we will give coal on-priority to those paying upfront. That has helped us reduce receivables and in the future, they will go down further,” Agarwal said in an earnings conference call.
As on December 2, around 59 plants had critical/super critical coal stock levels.
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The average receivables from gencos would typically hover at ₹7,000-8,000 crore during pre-Covid times. CIL had been following a policy under which nearly one-third of the money received from gencos was being adjusted against past receivables while coal was being supplied for the remaining two-thirds. This has helped Coal India reduce receivables significantly.
Comfortable liquidity
According to Rupesh Sankhe, analyst at Elara Capital India, CIL has comfortable liquidity to the tune of ₹ 30,000 crore and healthy operating cash flows.
“There were some payment delays due to Covid induced slowdown but now, discoms have started paying gencos. This will lead to better cash flows for CIL,” he said.