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Coal India sees 3.5% yoy rise in offtake in August; stock remains below guided levels

Coal India Ltd (CIL) saw production and offtake rise by 3.2% yoy and 3.5% yoy respectively in August 2018. This brings the production and offtake of CIL for 5MFY19 to 216.2mn tonnes and 246.9mn tonnes respectively. Thus, growth in offtake and production for 5MFY19 stood at 9.5% yoy and 12% yoy respectively.

Coal stock levels as on August 30, 2018 stood at 14.7mn tonnes (10 days of inventory) with 11 plants having critical or super critical levels of inventory. This is lower than inventory levels at the end of July 2018, which stood at 16mn tonnes (11 days of inventory). It is also much lower than the stipulated 22 days of inventory mandated by the CEA. Thermal power generators saw significant impact on margins due to the dual effects of both lower coal availability as well as higher coal prices (see: Power Q1FY19 earnings review).

According to media reports, the government has asked CIL to increase production and sales to 2mn tonnes per day to address this shortage. CIL had managed a daily offtake of 1.6mn tonnes per day in 5MFY19. However, CIL has 115 projects under implementation, which the management expects would add 367mn tonnes to production in FY19. However, limitations within the rail transportation network could act as a hindrance in the near term.

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