Settlement of recent government bonds to Coal India Limited ‘s subsidiary Bharat Coking Coal Ltd has helped to improve its financial position and ability to repay loans by the end of this fiscal year, said the executives of the company. The company borrowed Rs 160 crore from another Coal India subsidiary and last month took bank loans of about Rs 350 crore to manage its flow of funds, said the company executive.
“West Bengal Power Development Corporation has settled a large part of its recent dues while Damodar Valley Corporation has paid portions of its outstanding, increasing fund inflow. These two constitute more than 80% of sales for the subsidiary,” he said. Another executive said other state firms had also started setting pending payments. “Dues, which had crossed Rs 3,000 crore in April, have remained at nearly the same level as payments started coming in,” an executive said.
“Bharat Coking Coal’s income fell to about Rs 200 crore in April from at least Rs 800 crore in the previous months as many public sector consumers were lifting coal on credit during the lockdown. “As they have started making payments, monthly inflow increased to around Rs 400 crore in May and we estimate total inflow in June to have been over Rs 500 crore. We are hoping the inflows will gradually rise as lockdown is eased and sales pickup,” he said.
In order to boost sales, the company announced a 10% reduction in the price of three grades of coal, accounting for more than 90% of its sales in April. According to the first executive, lower production due to falling demand leading to lower costs, relatively higher premiums from recent e-auctions and the deferral of some marginal benefits for employees have also helped to improve the cash position.
One of the largest employers in the Coal India Group, it employs 42,000 people and spends around Rs 450 crore a month on salaries. Loans, along with improved cash flow from May onwards, have enabled the subsidiary to pay its quarterly attendance bonus, apart from regular salaries, in April and May, according to the executive. “Salaries for June onwards can now be managed from our existing cash position,” he said.
