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New Delhi: Public sector giant Coal India Ltd on Thursday reported a 14% increase in its consolidated net profit for the quarter ended 31 December on the back of higher sales.

The world’s largest coal producing company reported a net profit of 3,718 crore as compared with 3,262.49 crore in the year-ago period.

Net sales from operations rose 6.8% to 18,971.48 crore from 17,762.88 crore a year ago.

Total production increased 9.35% to 143.96 million tonnes and offtake rose 10.69% during the October-December quarter.

Total expenses grew 3.75% to 15,407.47 crore during the December quarter, compared with 14,850.11 crore in the year-ago period.

The company said in a statement that it has recently stepped up its coordination with Indian Railways to get more rakes and this appears to have paid off in terms of increased supplies.

Coal India has been able to maintain a growth trajectory in its supplies despite a slowdown in demand for the fuel from coal-fired power utilities, which account for around 77% of its overall coal supplies, the release said.

During a recent visit to Kolkata, Union power and coal minister Piyush Goyal asked Coal India chairman Sutirtha Bhattacharya to find a way to clear its mounting stocks—either by scaling down production or by a price cut.

To tackle this issue, Coal India is aggressively working to increase its coal sales.

According to an official who does not want to be named, Coal India is ready to offer more coal to power utilities, which have reached their trigger level and want to buy an additional quantity. Under the letter of assurance, Coal India currently supplies up to 75% of its stock to power producers. Currently, it has more than 40 million tonnes of inventory, the official said.

“Once the demand for coal increases, there will be higher offtake," he said.

Coal-fired power utilities received 108.2 million tonnes of coal during October-December 2015, compared with 103.58 million tonnes during same quarter in 2014, a 4.5% increase.

Power utilities are flush with coal—at 31.05 million tonnes, coal stocks with them as of 31 December were more than double that in the same period in 2014. The stock amounted to an average of 24 days with no power utility at critical or super-critical condition, Coal India said in a statement.

During the third quarter of the fiscal year, Coal India’s average loading of rakes per day grew by 9.2%.

According to Daljeet S. Kohli, head of research, IndiaNivesh Securities Pvt. Ltd, better offtake has resulted in better numbers in this quarter.

Kohli said that while the inventory is not creating a problem at present, Coal India should try to clear its piling stock faster. “It is directly related to power demand, which has to grow," he said.

To clear stock, Coal India may look at reducing prices or even try utilizing more of the e-auction route, which would help to fetch 25-30% more than the normal price.

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