"We are planning to invest around Rs 450 to 500 crore to produce 6 to 7 million tonne of industrial coal a year," SECL's chairman and managing director Gautam Kumar Jha told `The Financial Express'. Industrial coal has steady market in the country and investment in capacity addition for power grade coal at this juncture does not look economically viable till new power plants come up near SECL mines, he added.

SECL, which produced around 58 million tonne of coal in 1998-99 fiscal, is known as a power grade coal producing company. Only 16 million tonne of its coal is produced from under ground mines and the rest from opencast ones. Coal used for thermal power generation has very high ash content and is graded as F.

Admitting that profit margin for industrial coal would be less than the power grade coal, Jha said, "sales realisation from industrial coal will be better."

SECL hopes to mobilise funds for industrial coal production capacity addition from its internal and external budgetory reserves which are estimated to be around Rs 2,800 crore for the 10th Plan period.

Jha said, "Although SECL is facing cash crunch due to huge outstandings with the power companies, fund mobilisation would not be a major problem for the company."

SECL has around Rs 1300 crore outstanding from the power companies.Moreover, getting loan from financial institutions would not be a problem for SECL as its holding company, CIL, has been granted A++ credit rating by Crisil. And SECL, which reported a net profit of Rs 415.65 crore in 1998-99 fiscal, will get an advantage in getting funds from financial institutions, he pointed out.

The CentralMine Planning & Development Institute (CMPDI) has already prepared reports for developing industrial coal mining areas at Rehar in Bisrampur coalfields and Bhatgaon in Ambikapur district and Sundargarh coalfield under Chirimiri area in Surguja district of Madhya Pradesh.