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Business Standard
10-06-2025
- Business
- Business Standard
India's swelling coal stockpiles test state-owned mining giant CIL
Recent rains may have provided the world's most populous nation some relief from scorching summer heat, but they shattered state-owned mining giant Coal India Ltd.'s hopes of denting record-high inventories. The early onset of monsoon rains and frequent showers in parts of the country have kept India's electricity demand in check and coal stockpiles high. Combined with increased competition from cleaner sources of electricity, as well as other miners, Coal India is unlikely to return to the massive profit margins it enjoyed just a few years ago. 'Coal India's growth window is narrowing,' said Rupesh Sankhe, senior vice president for research at Elara capital India Pvt Ltd. 'With more and more renewable energy coming on stream, energy storage projects coming up and a renewed push for nuclear, demand for coal will increasingly be under pressure.' The Kolkata-based miner has been sitting on an unsold inventory of more than 100 million tons since the start of the fiscal year in April. Meanwhile, coal stockpiles at power stations, the company's biggest customers, are up almost a third from a year earlier at more than 58 million tons, the highest level in records going back 17 years. That reduces the premiums Coal India can charge in auctions — a key driver of its earnings. In 2022, when a post-pandemic rebound in the economy led to coal shortages, customers paid premiums of more than 300 per cent above baseline prices. That margin has fallen to 43 per cent and could potentially slip to 30 per cent, Marketing Director Mukesh Choudhary said on an investor call last month. Soft demand and ample supply is weighing on the outlook. India's coal-fired generation fell 6 per cent from a year earlier in the first two months of this fiscal year. Meanwhile, peak electricity consumption this year is still more than 10 per cent short of a projection in February, and more than 5 per cent below last year's maximum. Unless heat waves this month push power use drastically higher, it would be the first annual decline in at least two decades. Meanwhile, a raft of players are mining the fuel to run their own plants as well as pushing some of their production into the market. NTPC Ltd., India's largest power producer and coal user, is seeking to almost double its own production to 50 million tons this fiscal year. The company has also sought to source more fuel from non-state companies. Those producers are grabbing an increasing portion of the nation's coal output. They mined 198 million tons in the year through March, or about a fifth of the total. That will weigh on Coal India's sales. While Sankhe expects the miner's volumes to rise as much as 5 per cent annually for the next three to four years, he forecasts a decline thereafter. The company's profit has peaked, since the increased competition will weigh on auction prices and offset the higher volumes, he said.
Time of India
10-06-2025
- Business
- Time of India
India's swelling coal stockpiles test state-owned mining giant
Bloomberg Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Recent rains may have provided the world's most populous nation some relief from scorching summer heat, but they shattered state-owned mining giant Coal India Ltd. 's hopes of denting record-high early onset of monsoon rains and frequent showers in parts of the country have kept India's electricity demand in check and coal stockpiles high. Combined with increased competition from cleaner sources of electricity, as well as other miners, Coal India is unlikely to return to the massive profit margins it enjoyed just a few years ago.'Coal India's growth window is narrowing,' said Rupesh Sankhe, senior vice president for research at Elara capital India Pvt Ltd. 'With more and more renewable energy coming on stream, energy storage projects coming up and a renewed push for nuclear, demand for coal will increasingly be under pressure.'The Kolkata-based miner has been sitting on an unsold inventory of more than 100 million tons since the start of the fiscal year in April. Meanwhile, coal stockpiles at power stations, the company's biggest customers, are up almost a third from a year earlier at more than 58 million tons, the highest level in records going back 17 reduces the premiums Coal India can charge in auctions — a key driver of its earnings. In 2022, when a post-pandemic rebound in the economy led to coal shortages, customers paid premiums of more than 300% above baseline prices. That margin has fallen to 43% and could potentially slip to 30%, Marketing Director Mukesh Choudhary said on an investor call last demand and ample supply is weighing on the outlook. India's coal-fired generation fell 6% from a year earlier in the first two months of this fiscal year. Meanwhile, peak electricity consumption this year is still more than 10% short of a projection in February, and more than 5% below last year's maximum. Unless heat waves this month push power use drastically higher, it would be the first annual decline in at least two a raft of players are mining the fuel to run their own plants as well as pushing some of their production into the market. NTPC Ltd. , India's largest power producer and coal user, is seeking to almost double its own production to 50 million tons this fiscal year. The company has also sought to source more fuel from non-state producers are grabbing an increasing portion of the nation's coal output. They mined 198 million tons in the year through March, or about a fifth of the will weigh on Coal India's sales. While Sankhe expects the miner's volumes to rise as much as 5% annually for the next three to four years, he forecasts a decline thereafter. The company's profit has peaked, since the increased competition will weigh on auction prices and offset the higher volumes, he said.
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Business Standard
01-06-2025
- Business
- Business Standard
BCCL files IPO papers with Sebi, CIL to offload 465.7 million shares
Coal India Ltd (CIL) subsidiary Bharat Coking Coal Ltd (BCCL) has submitted draft papers to the Securities and Exchange Board of India (Sebi) for its upcoming initial public offering (IPO). The IPO will be a pure offer for sale (OFS) with no issuance of new shares. CIL plans to offload up to 465.7 million equity shares through the offering. 'The DRHP filing pertains to the proposed initial public offering of BCCL comprising an offer for sale of up to 465,700,000 equity shares by Coal India Ltd, which remains subject to receipt of applicable approvals, market conditions, and other relevant considerations,' BCCL stated. For the financial year FY25, BCCL reported a net profit of Rs 1,240.19 crore, down 20.7 per cent from Rs 1,564.46 crore in FY24. Revenue from operations in FY25 stood at Rs 13,998.45 crore, a marginal decline of 0.33 per cent from Rs 14,045.34 crore in FY24. Up to 60 per cent of the Qualified Institutional Buyers (QIB) portion may be allocated to Anchor Investors on a discretionary basis, in consultation with the book-running lead managers (BRLMs), in accordance with Sebi ICDR regulations. 'One-third of the Anchor Investor portion shall be reserved for domestic mutual funds, subject to valid bids being received from domestic mutual funds at or above the Anchor Investor Allocation Price,' the draft red herring prospectus (DRHP) stated. No green shoe option is contemplated under the offer. Currently, Coal India holds the entirety of BCCL's paid-up equity share capital, comprising 4,657,000,000 equity shares of Rs 10 each. BCCL noted in its DRHP that 'coking coal prices are on a correction trajectory as supply-side conditions in Australia are expected to ease with mine expansions and new approvals, while demand-side sentiments remain steady, with India being the major influencer.' BCCL is engaged in the mining and supply of high-grade coking coal, a critical input for steel production. Revenue from operations has been primarily driven by raw coking coal, contributing approximately 76.07 per cent in FY25, 75.40 per cent in FY24, and 76.07 per cent in FY23. Separately, CIL announced that its director (marketing), Mukesh Choudhary, has been given additional charge of director (business development). The appointment will take effect from June 1, 2025, for an initial term of three months, or until a permanent appointment is made, or until further notice — whichever is earlier — according to a regulatory filing.
