Coal India is on the radar. The stock has seen an upmove of 17 percent in the last one month and has hit a 52-week high. If you look at it in million tonnes, the offtake for Coal India in the month of August 2021 was about 48.6 million tonne compared to 40.5 million tonne in August of 2019 and 44 million tonne in August of 2020, so definitely demand has gone up. CNBC-TV18 spoke to Pramod Agrawal, CMD of Coal India, to discuss the company’s outlook.

On demand, he said, “The demand is quite huge, international coal that was coming into the country, the imported coal has almost come down substantially. Power plants, which were operating on imported coal have stopped production so the demand for domestic coal is very high. I feel that this demand is likely to continue in the coming four or five or six months. In that scenario, we are committed to meet the demand of the country, and we have been given a target of 740 million tonnes of dispatch this year, but I feel realistically, it will be somewhere near 710 to 730 million that we are likely to achieve this year.”

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On pricing, Agrawal said, “Already e-auction prices are quite high, we are getting e-auction prices in the range of 40 to 50 percent in certain segments and it is likely to continue that way or may increase in the coming month because of increase in demand. On FSA (fuel supply agreement) side, we must understand that it cannot be unilaterally increased by Coal India. Coal India is facing certain cost increases because of the wage increase that is likely to happen this year. Secondly, the cost of explosives, diesel etc., have increased. So, the price has to increase and we are working on that, we are getting all the stakeholders on board. Once that is done, we are committed to increasing the price.”

“It will be very difficult for me to suggest any figure, but we have not increased our price in the last four years. The last price increase took place in January 2018, so it is almost four years and by this time, the WPI has increased by 20 percent, CPI has also increased in the range of 16-17 percent. So, I hope that we should be adequately compensated for that, if not the complete thing but whatever increase has happened in our place, that should be compensated. So at least I am looking at something in the range of 10 percent,” he mentioned.

On receivables, Agrawal said, “We have reduced that number significantly. At the end of first quarter, the number was about Rs 16,000 crore. Now, I am told that it is in the range of Rs 13,000 crore. Once the audited figures are there, we will be able to tell you that, but I am told that the net receivables are in the range of 13,000 crore. So, in this quarter, we have reduced receivables by about Rs 4,000-5,000 crore.”

He added, “Coming to the cash balance sheet, our cash would have increased from Rs 17,000 crore to Rs 25,000- Rs 30,000 crore by now. So our balance sheet is quite strong, we have brought a lot of cash. Coming to the dividend policy, we have always been saying that our EBITDA will be in the range of 30 percent, so we will try to maintain it this year also. And if that is the EBITDA, I don't think there should be any concern about the dividend. Coal India has paid quite a good dividend in the last few years and we will continue to do so.”

For full management commentary, watch the video.

(Edited by : Dipika)