Coal India 's efforts to liquidate its all-time high stock by lowering the floor price for e-auction, and its attempts to sell to coal importers, have found only a few takers.
It planned to auction 60 percent of its 75 million tons inventory by May-June, after which four subsidiaries planned to offer 46 million tons under different e-auction schemes. Coal India reduced the price of the floor for bidding from 20-30% above the notified price to the notified price and the bulk of the bid was to be for auctions allowing consumers to increase the booked quantity over a period of several months.
However, at the recent special forward auction held by South Eastern Coalfields, only 11 per cent of the 3.8 million tons on offer were booked at the price of the floor by only three consumers. The subsidiary had previously offered another lot of 300,000 tonnes, 80 percent of which was sold at the floor price, through a separate spot auction.
“Auction offering, which used to be lapped up by consumers at premiums ranging between 40 percent and 70 percent, are not finding enough takers now,” a senior Coal India executive said. “They do not have the requisite liquidity to bid for the coal on offer, consequently whatever little quantity is being booked at floor price, which is the notified price of coal.”
It also sought to offer coal to coastal and southern consumers at discounts over international prices and asked the railroads to offer discounts on rail tariffs so that they would be affordable to those consumers. However, as the railways have yet to allow any discounts, coal can not be sold to these consumers, as the logistics make the fuel unworkable for them.
Coal India's offer to accept the 'use letter of credits' has received a lukewarm response among consumers. Although it caters to nearly 150 power consumers and almost an equal number of non-power consumers, only 35 companies have agreed to take advantage of this option.
“One has been able to negotiate usance credit from banks till now,” a senior Coal India executive said.
The ministerial path to stick to its goal of generating 710 million tons this year, combined with almost a 26% decrease in revenue, has impaired its net cash flow.
