Sutirtha Bhattacharya has been at the helm of Coal India (CIL) for only a couple of months but the former chairman of Singareni Collieries is an insider in the industry. In an interview with Probal Basak, he talks about the company plan and how it would utilise the cash reserves, a concern with investors. Edited excerpts:
Coal India has ended 2014-15 producing 494 million tonnes, 97 per cent of the target. Are you confident of meeting the target of 550 mt this year?
The output has gone up by 32 mt, one of the most substantial increases. Given the restrictions like land and clearances, the performance has been good. At South Eastern Coalfields (SECL) and some of the areas of Mahanadi Coalfields (MCL), the production had to be restricted due to some issues. We are making all efforts to ramp up the output further.
But offtake was lower than the total output at 489 mt, a break from the usual trend.
Offtake was less earlier, too. But, yes, there were issues with evacuation. In CCL and all, they could do the production but there were logistic constraints. Most of the logistic issues will get resolved with railway corridors and we will have to have some decongestion. We are planning whether the south route could be used a little more effectively. Pithead stock at the moment is 53.6 mt, about five mt more than in the previous year.
Is joining hands with the railways to put up evacuation infrastructure a solution to the problem?
We are collectively responsible for evacuation. We’re already working with the railways in Chhattisgarh. We are looking at an association of state governments, association of our subsidiaries and association of the railways’ nominated agencies like Ircon, Rites and RVNL. With state governments, there are been issues like land to be handled and any government would like to have a rail network. With railways’ partnership, the natural expertise will come in. We are there as someone who wants to send the coal.
But it should be a tripartite model. In Chhattisgarh, this model is working — SECL, Ircon and the state government. Proposals are being worked on for other areas as well. How this model will work is being fine-tuned.
CIL had a cash reserve of Rs 52,389 crore as on March 31, 2014. The company has often been criticised for not making the best use of cash. Rather, there have seen special dividends and there was talk of a share buyback as well. Are you looking at investments in evacuation infrastructure?
We are looking at an optimal return on the assets that will facilitate me to perform the job better. Earning interest is certainly not our objective. It is not only putting up the infrastructure. We are trying to optimise the return on the asset and this cash is a liquid asset. Of course, we have a plan on how much of this cash we would like to put in such infrastructure projects (involving the railways). But, I cannot share that at this moment. We are waiting for the railways to come forward to formulate the scheme. We are also talking with them at the ministry level. We are associating with the railways for wagons.
Are you going to procure wagons on your own?
We are looking to partner with the railways for wagons, where there will be an increased rake availability for us. We can give upfront money. We have agreed to give some railway funds to procure wagons, which will result in incremental supply of rakes to us. We are working on the scheme.
The board of directors recently approved MCL’s maiden pithead power plant project. Do you think pithead power plants would address the evacuation issue, beside ensuring productive return?
I have already approved that for MCL. We want to put it on a fast track. We can of course set up such projects after meeting the fuel supply agreement commitments. We are looking at how to evacuate coal, contribute to diversification and contribute to logistics.