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The days are getting hotter and a large part of the country is reeling under an intense heatwave. As the temperature increases, so does the demand for electricity. However, several states are struggling to keep up.They are running out of coal reserves--threatening disruptions in power supply--pushing India to the brink of a national power crisis.

On the national coal production front -- Coal India contributes the bulk, at nearly 83 percent, while the Singareni Collieries Company Limited (SCCL) chips in with nearly 9 percent of the total production.

Meanwhile, total coal imports have averaged around 200-250 metric tonnes over the years. But there is a caveat -- a fourth of these imports comprises coking coal which is not available in India and has to be imported, and the rest is thermal coal.

Coal India had a solid showing in FY22, scripting its highest-ever production, off-take (the amount of coal supplied from the coal pitheads), and dispatches to power plants.

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In the past few years, 77 to 82 percent of Coal India’s production has gone to the power sector. The previous fiscal, the total off-take grew by 15 percent but offtake to the power sector grew by 21 percent.

One would argue that offtake to the power sector looked good because it was on a low base, but even if one compares the offtake to the power sector with pre-pandemic years like FY20 and FY19, it still cuts an impressive figure.

What stood out in FY22 was the fact that dispatches were higher than the previous seven years -- FY15 to FY21 -- together.

Key factors that aided off-take were higher rakes available per day and also the fact the company could liquidate 38 MT in FY22 from its inventory of 99 MT at the start of the fiscal.

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What is working for Coal India?

In the first half of April 2022, supplies to thermal power stations are up by close to around 14.2 percent, and coal production has spiked by 27 percent year-on-year.

Receivables have seen a downtick from around Rs 20,000 crore at the start of FY22 to nearly Rs 12,300 crore at the end, with a sharp drop in March 2022.

E-auction sales are most watched as the bulk of its profitability comes from this segment.

In March 2022 premiums to FSA sales jumped to 290 percent and volumes doubled month-on-month to 7.9 MT.

Finally, Coal India’s off-take in April 2022 too has seen a big jump, which is pretty good news. The company has set an ambitious target of 700 MT in FY23. Let us see if this start is good enough to get them there.

First Published:Apr 19, 2022 4:31 PM IST