Cash crunch & competition: Coal India stares at new normal E-auction norms to hurt earnings

Sumit Maitra

The end of monopoly as proposed by the government in an ‘Atmanirbhar Bharat’ would be the least of Coal India’s troubles these days.

Besieged by falling demand and impending liberalisation of coal mining sector, country’s near monopoly state-owned entity is faced with a unique problem never imagined in recent memory.

Its cash in hand is being depleted fast due to an unfavourable cashflow situation due to mounting outstanding from customers, mainly the state-owned power generating companies.

The crisis has reached such a level that Coal India’s top brass is even thinking of short term borrowings to tide over the crisis temporarily.

Depleting cash balance and mounting dues

From Rs 18,000 crore in FY13 to Rs 253 crore in FY19, Coal India’s cash and cash equivalents have been coming down every year and the current year would be tougher with rising receivables.

During a comparable period between FY12 to now, Coal India’s dues from coal sales reportedly rose from Rs 7,400 crore to Rs 17,000 crore.