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Lost around 14,000-16,000 tn of coal per day for 2 months due to strike: S Narsing Rao, Coal India

In an interview with ET Now, S Narsing Rao, CMD, Coal India, talks about the revenue loss owing to the workers protest at the Talcher coal fields and shares his business outlook. Excerpts:

ET Now: There have been some production disruptions at Talcher coalfield due to workers protest. What is the total production and the revenue
loss?

S Narsing Rao: From October 1 onwards, there have been some  problems in the Talcher coal fields, particularly at two loading points. We were losing around four rakes per day, that is about 14,000 to 16,000 tonnes per day,for almost two months because of the so-called contract labour problem, precipitated by some local politicians etc. We had requested the Government of Orissa to take some action and they have looked into it.

Now for four days, there has been a total absence of coal production. Of course,this has cost us badly. In these four days, we have lost about $0.8 million, or about 8 lakh. But for two months starting October, we have lost at the rate of around 15,000 tn per day continuously. That itself was a huge loss for us in addition to this four days of total stoppage.
The operations have been resumed at other places last night. However, we are still losing 15,000 tn per day off take. This is the biggest unexpected jolt for us.
 

ET Now: There are news reports that the company could look at cutting the production guidance for FY14 by about 10 to 15 million tonnes. Is that true?


S Narsing Rao: There are still 118 days to go and we do not want to jump to production guidance just yet. But yes, at a proportionate target level, we are running a shortage of about 12 million tonnes. However, we are very confident that we will be able to cover up some part of that. We are still trying to achieve our target of 482 million tonnes production, but it is a fact that we are running a shortfall of about 12-13 million tonnes.


ET Now: Is there a possibility of the company raising imports to meet supply commitments for FSAs and will this then impact margins?
 

S Narsing Rao: No, not at all. That is totally outside our balance sheet and there can never be any pressure on the profitability or margins of Coal India. The import is only to fulfil the gap between the 65% and the 80% for the FSA holder. It has nothing to do with the financial aspects of Coal India.

ET Now: Any price hike the company may look at, since international rates have been firming up quite smartly in the last six-eight weeks?

S Narsing Rao: Generally our coal prices are not linked to the international prices, nor do we revise coal prices based on the trending  international prices. Our revision of prices is basically in response to increase in the cost of production. I cannot really say whether there will be revision or not. Certainly it has nothing to do with the international prices, be it increase or decrease.

ET Now: Give us an update on the divestment of the second round of road shows which has ended and how has the investor response been this time around?

S Narsing Rao: Let me clarify, the two rounds of road shows that we did were basically non-deal road shows. It has nothing to do with the proposed disinvestment, but involved meeting the investors, assessing their mood, etc. They were not linked directly to the proposed deal.

Coal India's fundamentals are strong and I do not think any investor had difficulties regarding us. Both existing and the potential investors were, by and large, upbeat about us. They had some issues about the production and volumes in future, regulatory issues, land acquisition, clearances, pending payments, etc, but fundamentally, we are quite strong.

ET Now: So when is the disinvestment likely? Government sources indicate that maybe by mid of December there could be some progress in the disinvestment roadmap?

S Narsing Rao: I really do not know because this is a subject which the finance ministry handles and Coal India is not in the picture at all.
It is for the Government of India to decide the percentage. Of course, the press carried a figure of about 5%, but I cannot really say anything more on this, because I am not a party to this decision making.

ET Now: Has the worker strike, earlier scheduled for December 17th, been averted?
 
S Narsing Rao: The last time when the trade unions proposed to go on strike on 23rd, 24th, 25th of September, we negotiated on various things.
At that time, they said they were deferring the strike to 17th, 18th, 19th of December. We have not heard anything more than that as of now
 
ET Now: One of the biggest concerns for the company right now is that there are dues from the power companies to the tune of about Rs 10,000 crore. What is the line of action on this front?

S Narsing Rao: We did have some discussions and there were some  understanding, but it will take some time to fully implement that. They had realised Rs 1000 cr payment out of the pending things by the first week of November. The issue has not been fully resolved yet with NTPC and DVC. We are confident that in one or two months it should be sorted out.

Source: The Economic Times