Coal India output may fall below 600 MT in FY21 on sluggish demand: Analysts

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Kolkata: State-run Coal India Ltd may witness de-growth in production during the current fiscal as its output is likely to fall below 600 million tonnes amid subdued demand, analysts said. The miner could end the current year with the production of around 580 million tonnes of coal as against its revised target of 650-660 million tonnes, they said.

Analysts of brokerage firm Motilal Oswal projected production of 582 million tonne for Coal India and off-take of 565 million tonnes in FY21 while ICICI Securities had estimated an output of 580 million tonne and sales of 550 million tonne this year. However, the miner is hopeful of achieving a 10 per cent growth in 2020-21 over 602 million tonne of coal produced last year, notwithstanding the disruptions caused by the COVID-19 pandemic, a Coal India official said. The coal behemoth had earlier set a production target of 710 million tonne for the current fiscal.

“Coal India has to match with the demand and can’t keep on producing even if it has the capacity. Demand for coal remains subdued. In FY20, production was at 602 million tonne but offtake remained at 581 million tonne,” an analyst said on condition of anonymity. The brokerage firms also projected a lower EBITDA (earnings before interest, taxes, depreciation, and amortisation) of 17-18 per cent for Coal India in the current fiscal.

The analysts are not optimistic on sales demand even though the miner has introduced a new category of spot e-auction for importers only and aimed at replacing 150 million tonne of the fuel sourced from abroad with domestic supply. The coal procured under the “special spot e-auction scheme 2020 for import substitution” will be for use within the country.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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