Coal's Drop Forces Indian Monopoly Miner to Alter Sales Tactic

  • Bhattacharya asks staff to focus on quality, cost reduction
  • Miner making efforts to increase ease of doing business

Coal India Ltd., the world’s biggest producer, is seeking to change the way it sells the fuel as sluggish demand adds to stockpiles and cheaper imports threaten its market share.

The company needs to “shrug off the years of inertia of monopolistic marketing and switch over to competitive marketing with alacrity,” Chairman Sutirtha Bhattacharya said in a letter to employees posted on the company’s website. “Marketing of coal will be the decisive factor in defining our performance.”

Kolkata-based Coal India, after years of under performance, faces a surfeit of supply after production outpaced demand. Power plants, its biggest customers, have near-record inventories, adding to the more than 50 million metric tons of stocks at the company’s mines. At the same time, the miner faces the threat of cheaper imports. Thermal coal at Australia’s Newcastle port, considered an Asian benchmark, has declined 58 percent over the past five years.

Coal India, which accounts for more than 80 percent of the country’s output, must focus on quality and cost reduction to boost its performance, Bhattacharya said in the letter. Price, quality and commitment to customers will be key to the company holding on to its market share, he said.

“We are committed to increasing the ease of doing business with us,” Bhattacharya said by phone. “We are trying to be more responsive to the needs of the customers and will address all the issues to combat the threat from other fuels and coal from other sources.”

The company has already taken some steps. It reduced the reserve price for some auctions sales and sacrificed bonus payments for increased supplies of higher grades of the fuel.

“Coal India is making efforts to become a better marketer of coal,” said Goutam Chakraborty, an Mumbai-based analyst at Emkay Global Financial Services. “These small steps will not only help it clear the current stockpiles but also lure customers who have turned to imports.”

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