"Coal India's price will naturally remain a benchmark. I see coal prices decreasing," former chairman of Coal India Partha Bhattacharya said.
In an interview to CNBC-TV18 former chairman of Coal India Partha Bhattacharya shared his reading on the Supreme Court's verdict of de-allocating coal blocks allotted since 1993.
Below is the transcript of Partha Bhattacharya's interview with CNBC-TV18's Nayantara Rai.
Q: In your opinion if it comes down to Coal India having to take over some among these 46 blocks will it be able to manage the captive mines given the fact that it requires a lot of bandwidth to manage them?
A: Coal India's mines are scattered throughout the coal-bearing states in the country. So everywhere where these captive mines are there around that place Coal India mines are there as well. So I don't see too much of a problem for Coal India to take over these mines and run, I don't think that is a big problem.
Q: If these mines are auctioned what is going to be the impact on the cost of coal. What happens to the user industry, let's not forget that is linked to these captive mines, isn't there going to be a cost escalation which will then have to be passed on to the consumers?
A: Ultimately, cost is directly or rather inversely related to the extent of competition in the system. If there is a substantial amount of competition among large players and a lot of coal is produced coal is not in a shortage situation and Coal India is already there as a large player. Coal India's price will naturally remain a benchmark and nobody can afford to sell it at higher than that price. Rather prices will tend to come down.
I don't see any reason for prices to go up and more importantly in that kind of a situation this import of 180 million tonnes of coal that has been witnessed last year and is going to grow up further that scenario will change.
So our exposure to imported coal will cease and the price difference between imported coal and domestic coal will continue to be there for some time. I don't see a reason why the cost of coal in India will actually increase, through competition it may actually decrease.
Coal India stock price
On September 24, 2014, Coal India closed at Rs 351.35, up Rs 16.80, or 5.02 percent. The 52-week high of the share was Rs 423.50 and the 52-week low was Rs 240.50.
The company's trailing 12-month (TTM) EPS was at Rs 20.04 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 17.53. The latest book value of the company is Rs 26.04 per share. At current value, the price-to-book value of the company is 13.49.
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