Coal India (CIL) has informed the BSE that it has increased prices of coal produced from Western Coalfields (WCL). The price has been increased by an average 10% across all grades, which would fetch it an additional R140 crore for the December-March period.
CIL has also revised coal sizing charges and rapid loading charges in all its subsidiaries, which would fetch it an additional R197 crore in the December-March period.
The increases, however, come despite consumers complaining arbitrary pricing decisions and the Competition Commission of India (CCI) slapping R1,773-crore penalty for wrongfully utilising its dominant position as a supplier of fuel in the market.
?This price increase would make up for the revenue losses the company would incur in missing its targeted production by 7 million tonne in FY14,? a director, on the condition of anonymity, said. CIL has set a target of producing 482 mt in FY14.
However, CIL is trying to achieve its off-take target of 498 mt in the fiscal, which means there would be no loss in revenue. But the mark up could fetch it an additional R337 crore in the last quarter, which CIL chairman S Narsing Rao felt would make up for revenue loss which CIL has made in the first eight months for lower than targeted offtake.
While CIL targeted an off take of 268.78 mt, it achieved an offtake of 259.87 mt in the first eight months. Its October off take target fell short of 10.04 mt against a target of 45.55 mt.
However, on matters of price revision, CIL was not worried with the CCI penalty because the penalty has not held its pricing faulty. CIL has been penalised for abusive clauses in the FSA.
The CCI order says: ?The investigation did not reveal any unfair or discriminatory pricing charged by the opposite parties (CIL) in supply of coal in the relevant market ?There is no material placed on record which indicates charging of excessive, or unfair or discriminatory prices by CIL.?
So the recent CCI order did not pose any hindrance in revising prices of WCL coal, an official said. But the CCI order has, however, observed that CIL enjoys great flexibility in pricing and that the board also enjoys and exercises a huge degree of independence in pricing.
CIL last revised prices in May this year, increasing prices of lower grade coal by an average 10%. This was done with a view to generate additional revenue of more than R2,500 crore. It, however, reduced prices of higher grade coal by 12%.
In November again, CIL increased the cost of evacuation by an average 1.7 lakh per rake, which effectively increased the prices of highest grade of coal by 10% and lowest grade of coal by less than 1%.