Despite the increasing international coal prices and its immediate effect on imported coal for domestic consumers, Singareni Collieries Company has decided not to increase coal prices for domestic consumers. The state PSU is looking to clock Rs 9,000-crore revenue during 2011-12 with a planned capital expenditure of Rs 3,000 crore. In an interview with FE?s BV Mahalakshmi, S Narsing Rao, CMD, said the company is raising funds from financial institutions for its proposed expansion and is hopeful of finalising financial closure by February. Excerpts:
What kind of pricing pressure do you perceive in the wake of the rising global coal prices and the recent washout at Brisbane?
At present, we do not have any plans to increase coal prices. In fact, our prices are relatively 30% to 40% lower than the imported coal prices. We do not want to exploit the current situation and increase prices on the lines of global markets.
Then, how are you managing the prices and the cost of production?
We are working on a unique business model which is a win-win situation for SCCL and our consumers. Through this model, we are able to get additional prices in the current situation for C and D coal varieties. This additional price is better than the imported prices for the consumer which is nearly more by about 40% of the contracted quantity. Globally, spot coal prices have touched about $108 per barrel.
Some of our customers include MahaGenco, NTPC, TamGen, etc who have been benefitted by this non-binding model. We have earned about Rs 200 crore and hope to earn more in this fiscal through this cost-plus model.
What is the expansion plan and how much is the capex earmarked for the proposed expansion?
We are targeting a revenue of Rs 9,000 crore by the year 2011-12. We are in the final stage of talking to financial institutions for raising the capital and hope to achieve financial closure by February in addition to the internal resources. As per our annual plan, we are planning a capex of about Rs 3,000 crore and for the current year, we have planned a capex of Rs 1,350 crore. Of this, about Rs 600 crore would used for the Adriyala longwall project and the rest will be divided over the power plant and bringing in technical infrastructure.
We are introducing the country’s largest longwall project with an annual production capacity of 2.81 million tonne in Adriyala project at Ramagundem. Another long wall project with a capacity of 2.747 million tonne per annum is being proposed in Kakatiyakhani at Bhupalpalli.
We are operating two continuous miners at in SCCL. The Andhra Pradesh government has accorded an investment approval for a 600-mw coal-based thermal plant at Adilabad district which will entail an investment of about Rs 2,700 crore and is expected to commence in the year 2014.
What are your revenue targets and are on track to achieve the same? Any technological upgradations?
SCCL produces about 50 million tonnes per annum, of this 24% of coal is produced from underground mines in the country. We have a target to produce 51.3 million tonne by March and we are very much on track. We hope to cross this fiscal with Rs 8,000 crore revenue. As of 2009-10 under the New Coal Distribution Policy, SCCL has over 171 customers in addition to two power utilities, 55 cement units, 55 sponge units and others. There are over 25 mining projects, (14 open cast and 11 underground) under various stages of implementation.
We introduced semi-mechanisation in 1981 to reduce the human drudgery and wipe out manual loading. We have introduced continuous miners and have achieved national record production of 66,229 tonne in single at Godavarikhani 11 Incline. It crossed the previous record production of 66,150 tonne from Jhanjra mine in ECL. The average monthly target of continuous miners is about 36,000 tonne as against the new production of 66,229 tonne.
Further, the cost of production is also reduced and improvises the production in underground mines. This technology may help to extract about 2,000 million tonne which is locked up in underground mines.