At 42.7mt/45.0mt, Coal India’s (CIL’s) production /offtake in June 2016 was up 10.0%/6.6% y-o-y, respectively – the growth has picked up sharply vs past two months. 1QFY17 production/offtake (125.7mn/ 133.2mt) was up 3.6%/2.9% y-o-y vs. 12.0%/8.3% growth seen in 1QFY16.
The robust production growth in June 2016 was led by MCL (+22% y-o-y) and double-digit growth at ECL, CCL and NCL. In terms of offtake, while three subsidiaries recorded a double-digit growth (MCL, NCL, and ECL), it was partially offset by a 11% y-o-y decline in WCL offtake during the month.
In our view, the pick-up in growth in June 2016 was potentially driven by– Robust electricity demand seen in past few months (2MFY17 demand up 10.7% y-o-y) implying higher demand for coal, moderated coal stock at power plants – 22 days at the end of May 2016 vs 27 days as of March 2016, and cut in high-grade coal prices, effective May 30.
June 2016 production came in 1.4%/5.4% below CIL’s MoU-based targets – while the production shortfall was driven by SECL, offtake shortfall was primarily seen at SECL/WCL/CCL.