Coal India chief blames poor availability of rakes for lower growth in offtake

Coal India Chairman Sutirtha Bhattacharya blamed it on poor availability of rakes from Railways for lower growth in offtake in 2014-15.

The State-owned miner recorded the highest ever incremental growth in production (31.8 million tonne), in a single year, during the last fiscal.

As against a robust 6.9 per cent growth in output to 494.23 mt, offtake or sales grew by only 3.8 per cent to 489.34 mt.

“Growth in coal offtake ought to have been more,” Bhattacharya has been quoted saying in a company release issued on Saturday. “One of the reasons was the wagon availability was not commensurate with the indents of coal companies,” the release added.

CIL’s daily loading increased by a mere 2.3 per cent (4.3 rakes a day) during the last fiscal. On an average 194.5 rakes (a goods train) were loaded a day during the last fiscal as against 190.2 rakes a day in 2013-14.

The low-offtake triggered a jump in pithead stock from 48.6 mt in 2013-14 to 53.64 mt in the last fiscal. Of the total, 9.78 mt or over 18 per cent was accrued in March. The miner diluted inventory by nearly 22 mt between 2012 and 2014. The inventory, left in the open on pitheads, is close to 11 per cent of the annual production in 2014-15. Since heat value of coal deteriorates if left in the open, higher inventory will cost CIL both in terms of higher finance cost and lower returns on the sale of fuel. While CIL release is silent on inventory position, the development clearly indicates the pitfalls of a production push without creating necessary coal evacuation infrastructure. The curbs on open market sales and restriction on fuel sales to non-power sector also limited the miner’s market access over the last two years.

A focused attention on power sector is apparent on the despatch growth. While the total despatches grew by only 3.8 per cent, supplies to electricity generation utilities sector increased by 8.5 per cent during the last fiscal.

“Despatch of coal to power utilities increased by 30.35 mt to 384.18 mt in 2014-15,” CIL release said. The bottom line is while Coal India is accumulating inventory, steel and cement sector are resorting to imports.