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    Few takers for CIL coal despite lower floor price at e-auction

    Synopsis

    Coal India planned to auction 60% of its 75 million tonnes inventory by May-June following which four subsidiaries planned to offer 46 million tonnes under different e-auction schemes. CIL reduced floor price for bidding from 20-30% above notified price to the notified prices and bulk of the offer was to be for auctions allowing consumers to lift booked quantities over several months.

    coal_apAP
    Coal India’s offer for acceptance of ‘usance letter of credits’ has found a lukewarm response among consumers.
    Kolkata: Coal India’s efforts to liquidate its all-time high stock by lowering floor price for e-auction and attempts to sell to coal importers has found only a few takers.

    It planned to auction 60 per cent of its 75 million tonnes inventory by May-June following which four subsidiaries planned to offer 46 million tonnes under different e-auction schemes. Coal India reduced floor price for bidding from 20-30 per cent above notified price to the notified prices and bulk of the offer was to be for auctions allowing consumers to lift booked quantities over several months.

    However, at a recently-held special forward auction conducted by subsidiary South Eastern Coalfields, only 11 per cent of 3.8 million tonnes on offer was booked at floor price by only three consumers. The subsidiary offered another lot of 300,000 tonnes through a separate spot auction earlier, 80 per cent of which was sold at floor price.

    “Auction offering, which used to be lapped up by consumers at premiums ranging between 40 per cent and 70 per cent, 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 are at floor price, which is the notified price of coal.”

    It was also looking to offer coal to coastal and southern consumers at discounts over international prices and had requested the railways to offer discounts on railway tariffs so that it is affordable for these consumers. However, as railways are yet to allow any discounts, the coal cannot be sold to those consumers as logistics make the fuel unviable for them.

    Coal India’s offer for acceptance of ‘usance letter of credits’ has found a lukewarm response among consumers. While it caters to almost 150 power consumers and almost an equal number of non-power consumers, only 35 companies have agreed to use the option.

    “One has been able to negotiate usance credit from banks till now,” a senior Coal India executive said.

    A ministerial direction to stick to its target of producing 710 million tonnes this year, coupled with almost 26 per cent fall in sales have been hurting its net cash flow.


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