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How Realistic is CIL's 1 Billion Tonne Production Target?

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India’s surging coal output is dealing a blow to chances of a revival in global prices as the third- biggest consumer looks to dramatically reduce overseas purchases.

Source: live mint

SNP Insight

If India achieve its target renewable energy capacity then the demand for power from coal based power plant will reduce in future. Presently the bad financial condition of the distribution companies reduce the electricity demand and hence the coal demand by power plants has reduced. Also the ongoing coal auction may reduce the future dependency of large power plants on CIL. If this scenario prevail for more 3-4 years then it may happen that domestic coal production will increase the demand. And with falling demand for coal in international market may make it hard to export inferior quality Indian coal. If supply exceed the demand then there may be risk of fall in price of coal below the economic cost of production. So, this may put financial stress on the company (CIL Q1 Net Profit fall short by 9.2% of Expectation).

Source: SNP Infra Research