Subdued industrial growth notwithstanding, state-owned Coal India recorded a 10 per cent growth in volume of sales in the first seven months of the fiscal.
According to its stock market disclosure, offtake grew at a healthy 9.9 per cent to nearly 296 million tonnes during April-October this year.
Production growth is restricted at 9.2 per cent to 274 mt, to avoid piling of pithead stock that is a financial drain.
A misplaced focus on production saw CIL ending last fiscal with an additional 5.5 mt pithead stock (to 53.47 mt), when compared to the year before.
The challenge for the current fiscal was, therefore, to enhance sales, diluting the stock, rather than adding on to it. Considering the overstretched railway capacities, the job was easier said than done. But an unprecedented 11 per cent month-to-month growth in rail despatches indicate the miner has so far been on track.
The sales push got a tail wind from the post-monsoon surge in coal-based power generation.
Coal-fired electricity generation was up by 16 per cent in October, triggering higher demand for fuel.
CIL took full advantage of the demand growth by despatching a little more coal than it produced and bringing down the pithead stock (31.68 mt) close to last year’s level (30.54 mt).
That the company is restricting production is evident from the gross mismatch between overburden (OB) removal and production. While production grew at 9.2 per cent, OB removal increased by an unprecedented 37 per cent during April to October.
Considering an average stripping ratio of 1:1.8; CIL should remove approximately 1.8 mt of earth for every 1 mt coal. But this year, it had evidently done much more.
While production had gone up 23 mt to 273 mt, OB removal increased 165 mt to 610 mt. It means coal seams are more ready for mining than those brought into production.