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Online auction showers Coal India with profit

14 Jun 2011 Evaluate

Introduced by the government five years back as a tool to help coal consumers in the small non-core sector, has turned out to be a cushion for the largest coal producer in the world against flat production. The contribution of spot sales of coal or e-auction, to Coal India’s overall revenues has seen a sharp rise from 11.9 per cent in 2007-08 to 17.5 per cent last financial year, even as its contribution to overall volume of coal sold remained stagnant at 10 per cent over the four-year period. This is a result of an over 37 per cent jump in the average sale price at e-auction from Rs 1,346 a tonne to Rs 1,846 during the same period.

In the last financial year (2010-11), Coal India sold coal through e-auction at a premium of a whopping 81 per cent over the average notified price of Rs 920 a tonne. E-auction coal had fetched at a premium of 63 per cent over the same average notified price in 2009-10.The company contributes over 80 per cent of India's domestic coal production of 530 million tonnes (mt) annually. While its production remained flat at 431 m last financial year, the company posted a 12.9 per cent jump in net profit in 2010-11 at Rs 10,867 crore owing to higher realization from selling coal at market price. E-auction accounted for Rs 8,810 crore or 17.5 per cent of overall sales of Rs 50,233 crore.

Shortages in coal availability unlikely to subside soon, the boost to Coal India’s profitability as a result of increased realization from e-auction sales is here to stay. The trend has likely to continue in the short to medium term as developing a new coal mine takes five-seven years in India.

Particulars

FY08

FY09

FY10

FY11

E- auction  volume (In MT)

28.7

48.8

Coal India Share Price

438.70 5.80 (1.34%)
17-Apr-2026 16:59 View Price Chart
Peers
Company Name CMP
Coal India 438.70
NMDC 89.78
GMDC 733.40
Sandur Manganese 218.35
MOIL 327.60
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