KOLKATA: Coal India's new pricing policy, which involves selling coal on the basis of total energy content in each consignment, is expected to bring down cost of power generation that would be passed on to consumers, said executives from the company.

"Under the new policy, prices of seven grades have been reduced," CIL chairman Gopal Singh told ET. "In some cases, prices have been reduced even to the extent of Rs 162 per tonne compared with present coal price chart. It would make power generation cheaper."

Post steep hike in non coking coal FSA prices by CIL, we lift our FY18-19E EPS 6-40%. We upgrade CIL to Buy from Hold as the price hike along with recent evacuation charge should more than offset wage hike and lead to margin expansion. Restocking at power plants should drive offtake growth near term. We expect EPS to grow at 30% EPS CAGR over next two years. At 6.8x Ebitda ex OBR, valuations appear attractive. Stock also offers 5% dividend yield potential. Price revision to lift average FSA realisation by 10% CIL has raised FSA prices for lower grade coal (3300-4300 kcal/Kg) by 15-18%, while it has cut prices for high grade coal (over 6400 Kcal/kg) by 2-5%.

Coal India (CIL), the world’s largest coal miner, will be adopting a new billing mechanism for consumers from the coming financial year, in line with global practices.

According to the plan, sales bills will now be raised on the basis of the actual consumption of gross calorific value (GCV), expressed as kilo calorie per kg of coal. Currently, consumers are charged on the basis of the coal grade.

Coal India (CIL) has raised non-coking coal prices by an average of nine per cent to stave off the impact of increasing wages of around 0.3 million employees.

This is expected to cover the increased expenses, while providing the company headroom to step up capital expenditure for mining operations. CIL’s annual expenses increased by an estimated Rs 64 billion after it decided to revise wages for executive and non-executive employees.

Coal India has raised prices of thermal coal by an average 9%. The decision was taken at a board meeting held on Monday while revised prices would be effective from Tuesday.

It will make power generation costlier by a similar percentage. Cost of cement and fertiliser production is also expected to rise as a result.

To bring back lost coal freight revenue, the ministry of railways has prepared a scheme for a bypass rail route near the 35-km line between Chandrapura and Dhanbad that was closed due to underground fire at the Jharia (Jharkhand) coalfields in June.

This will be funded by government-owned Coal India, holding company of Bharat Coking Coal that operates the Jharia mines. Closure of the line meant an annual estimated loss for the railways of at least Rs 27.5 billion.

KOLKATA: Power companies have been topping their supplies from Coal India in the four months to end of November with purchases through eauctions, imports and captive mines, data from the Central Electricity Authority shows.

This assumes significance because power companies have complained of less-than-adequate coal availability during these months.

Coal India Ltd (CIL)’s profitability should benefit from a rise in coal earnings. Last week, it introduced evacuation facility charges of Rs50 per tonne on all coal despatches (except despatches through rapid-loading arrangement) with immediate effect. This is expected to generate incremental annual revenue of Rs2,500 crore, adding Rs800 crore to revenue in the current fiscal alone.

The Indian Railway Catering and Tourism Corporation (IRCTC) and Coal India (CIL) are joining hands for a project to use the excess groundwater from the latter’s mines to produce purified packaged water being sold under IRCTC’s popular Rail Neer brand. A site has been identified at Argada near Ranchi in the coal-rich state of Jharkhand to set up a bottling plant of IRCTC. “Water will be supplied from the adjoining coal mines to this plant for purification.

The first round of bidding under the central government's SHAKTI scheme for providing coal to private power units would see revival of 10,000 Mw of generation capacity, it is estimated.

Among the companies to benefit are Adani Power, Lalitpur (Bajaj Hindustan), KSK Mahanadi, GMR Energy and GVK. These stressed assets had a locked investment of at least Rs 40,000 crore.

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