‘Grade fall to dent CIL’s FSA prospect’

‘Grade fall to dent CIL’s FSA prospect’

The recent grade downgrades at Coal India’s mines could hit its realisation from fuel supply agreement (FSA) by 3-5% and estimated earnings for the current fiscal year by 11-16%, according to a note released on Wednesday by research analyst firm Jefferies India.

“We believe recent grade downgrades at CIL’s (Coal India Ltd) mines could hit FSA realisation by 3-5% and FY18 (2017-18) estimated earnings by 11-16%,” the note said.

According to the note, part of the impact has already been reflected in earnings of 2016-17. The fuel quality watchdog Coal Controller’s Organisation downgraded 40.76% of 871 sidings at 386 mines of Coal India and in most cases, downgrading has been of one to two grades, the miner said.

According to the note, part of the impact has already been reflected in earnings of 2016-17. The fuel quality watchdog Coal Controller’s Organisation downgraded 40.76% of 871 sidings at 386 mines of Coal India and in most cases, downgrading has been of one to two grades, the miner said.

“Our review of mine wise grade changes at key subsidiaries – South Eastern Coalfields Ltd (SECL), Mahanadi Coalfields Ltd (MCL), Eastern Coalfields Ltd (ECL) and Bharat Coking Coal Ltd (BCCL) – suggest grade reset at these subsidiaries could hit CIL’s FSA realisation by 3.2%.

“We think impact due to grade changes at SECL which contributes 25% of the miner’s output could be meaningful. Extrapolating this to other subsidiaries Central Coalfields (CCL), Western Coalfields (WCL), potential impact on CIL’s FSA realisation could be around 4.8%,” the note said. agencies. Read More…

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Credit By : ET Energy World

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