Coal India expects 5-7% increase in output during fiscal 2020-21

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Coal India Ltd (CIL) is hopeful of achieving 5-7 per cent growth in production at around 640-650 million tonnes (MT) in FY21, as compared with 602.14 MT in 2019-20. CIL witnessed close to 12 per cent drop in production and around 22 per cent decline in offtake due to poor demand during the first quarter of this fiscal.

However, with industrial and commercial activities picking up from July onwards and demand for coal having improved, CIL was able to shrug off the Q1’s tepid growth and clocked 11 per cent rise in production and nearly 10 per cent increase in off-take during Q2 over the same quarter last year.

In September 2020, CIL recorded the highest ever production at 40.51 MT (30.78 MT), while off-take grew by nearly 32 per cent to 46.46 MT (35.28 MT). The growth momentum has continued in October with the company posting around 20 per cent rise in output and 24 per cent growth in offtake as on date.

It should be recalled that the coal behemoth had fallen short of its targeted production in the last fiscal. There were apprehensions that the company might witness de-growth this year on the back of the poor demand situation in the wake of the pandemic.

For FY20, CIL achieved 91 per cent of its targeted production of 660 MT. The company closed the fiscal year 2019-20 with an annual coal production of 602.14 MT, which is marginally lower than 606.89 MT of coal it had produced last fiscal.

According to Jayanta Roy, Senior Vice-President and group head, corporate sector ratings, ICRA, the expectation of a revival in the economy could lead to higher demand for coal thereby leading to a spurt in production moving forward. “Power consumption is improving and given the expectation that the revival in economy would lead to a higher demand, coal production is likely to grow. However, if there is a second wave of the pandemic post the festival season, it could throw the plan out of place,” he said.

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