ET NowIn a chat with ET Now, Sutirtha Bhattacharya, CMD, Coal India, talks about the impact of yesterday’s Rail Budget on coal companies and prices. Excerpts:
ET Now: Give us a sense of the freight hike impact on coal prices and on a company like Coal India.
Sutirtha Bhattacharya: Railways accounts for more than 70% of Coal India's freight traffic. But it does not affect the company hugely, because even with that our coal supply price at destination will be less than the substitute cost.
ET Now: Are you saying you won't be impacted because you will pass it on to your consumers?
Sutirtha Bhattacharya: Yes, that is what I said. As soon as the coal is despatched, the cost of freight goes to the customer.
ET Now: What kind of increase in coal prices is expected because of now this hike?
Sutirtha Bhattacharya: We are not increasing the coal price. The different sectors will be able to tell you depending upon their distance, depending upon the power plant or the other plants they are taking.
ET Now: Are you saying the hike will marginally impact the operational picture for Coal India?
Sutirtha Bhattacharya: It does not impact the operational picture.
ET Now: The Rail Ministry has said that only from one PSU, the railways will get Rs 20,000 crore worth of business. Would it be safe to assume that this PSU is Coal India?
Sutirtha Bhattacharya: Coal substantially contributes to the railways' exchequer. I am not in a position to hazard a guess as to which PSU they are talking about. But the fact is that Coal India substantially contributes to the railways' earnings.
ET Now: How is the transportation right scene as of now? A lot of marketmen believe that the availability of rakes is a constraint for companies. Do you think the overall situation could improve post yesterday's Rail Budget?
Sutirtha Bhattacharya: In fact, the budget offers a good long-term solution for us. With the kind of strategy that we have been following, we will benefit in the long haul from augmentation of wagons, more wagons coming into play, etc.
ET Now: Give us a sense of the freight hike impact on coal prices and on a company like Coal India.
Sutirtha Bhattacharya: Railways accounts for more than 70% of Coal India's freight traffic. But it does not affect the company hugely, because even with that our coal supply price at destination will be less than the substitute cost.
ET Now: Are you saying you won't be impacted because you will pass it on to your consumers?
Sutirtha Bhattacharya: Yes, that is what I said. As soon as the coal is despatched, the cost of freight goes to the customer.
ET Now: What kind of increase in coal prices is expected because of now this hike?
Sutirtha Bhattacharya: We are not increasing the coal price. The different sectors will be able to tell you depending upon their distance, depending upon the power plant or the other plants they are taking.
ET Now: Are you saying the hike will marginally impact the operational picture for Coal India?
Sutirtha Bhattacharya: It does not impact the operational picture.
ET Now: The Rail Ministry has said that only from one PSU, the railways will get Rs 20,000 crore worth of business. Would it be safe to assume that this PSU is Coal India?
Sutirtha Bhattacharya: Coal substantially contributes to the railways' exchequer. I am not in a position to hazard a guess as to which PSU they are talking about. But the fact is that Coal India substantially contributes to the railways' earnings.
ET Now: How is the transportation right scene as of now? A lot of marketmen believe that the availability of rakes is a constraint for companies. Do you think the overall situation could improve post yesterday's Rail Budget?
Sutirtha Bhattacharya: In fact, the budget offers a good long-term solution for us. With the kind of strategy that we have been following, we will benefit in the long haul from augmentation of wagons, more wagons coming into play, etc.
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