India’s second largest coal producer Singareni Collieries Company (SCCL) has firmed up a strategy to enhance contribution of underground mining and productivity aimed at improving profitability and staying afloat, said chairman and managing director S Narsing Rao.

The state-owned coal firm has also finalised its production plan for the twe-lfth five-year plan period where it aims to improve annual production to 57 million tonne by 2016-17 from around 52 million tonne now. “A proposal on the twelfth five year plan projections will be shortly submitted to the Union coal ministry for its approval,” said Rao.

The strategy firmed up now include improving the underground mining production by nearly 30 per cent to around 15.5 million tonnes by 2016-17 from around 12 million tonnes now, while the open cast mining production would slightly increase to around 41.5 million tonnes from 40 million tonnes now. Similarly, the output per man shift in the underground mining would go up to 1.2 tonne this fiscal from 1.1 tonne last fiscal.

Till March, the SCCL reported a production of 51.33 million tonnes, which fetched it the highest-ever sales turnover of Rs 8,936 crore, a growth of 14 per cent over the previous year. However, owing to a 21 per cent rise in wages costs on the back of inflationary pressures during the year, the company is set to suffer a marginal fall in net profit from Rs 368 crore in the previous year.

Rao said SCCL will now focus on improving the contribution of underground mining and output per man shift as the company has almost reached a plateau in coal extraction and it is unlikely to report more than 1-1.5 million tonne of incremental growth a year going forward. He attributed this to the restrictive and difficult geo-mining conditions of the Godavari Valley coalfield, known for deep seated reserves, lot of faults, poor grade coal and steep gradients.

“I am expecting somewhat tougher days for the coal operations in the days to come. Therefore, I expect, after four to five years, profits from the coal operations will be very tight,” Rao said.

He added the company has more or less reached a saturation state in controlling cost of production and is unable to significantly reduce the costs. While nearly 85 per cent of costs in underground mining were fixed with some 15 per cent variable costs, the company plans to go in for mechanisation of more underground mines to improve the productivity significantly.

SCCL plans to take up two long wall mining projects at Adriyala near Ramagundam and Bhoopalapally in Warangal district involving an annual capacity of over 3.5 million tonnes and 2.5 million tonnes respectively through mechanisation. The projects will begin production in next two years.

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