Coal prices may hit corporate scorecard

MUMBAI: The Indian economy is on a roll and most corporates are predicting excellent Q4 numbers, but two factors — rising prices of coal and the cost of transporting it — could yet pull down India Inc''s bottomline, according to industry sources.
Coal is a major input, especially in the power, cement and steel industries.
The price of Chinese coal has moved up from Rs 1,430 to Rs 2530 per tonne while the price of imports from South Africa has increased from Rs 1,450 to Rs 2,660 over the past 6 months.The bulk of the imports are from Australia and South Africa on account of good quality and cheaper prices. Global coal prices have gone through the roof due to several factors, including increased demand for energy in China and a heat wave in Europe.
Due to higher global coal prices, the country''s power plants are switching to cheaper domestic coal, but this in turn has caused a shortage of rail wagons to transport the coal. "There is an acute shortage of rakes in certain areas, as the Railways were not expecting this demand, and this has affected the dispatches of several companies already," a source said.
"We have seen an increase in freight costs, especially in the states of Uttar Pradesh and Rajasthan, as a result of the gradual withdrawal of the ‘golden pass'' system," A V Srinivasan, secretary-general of the Cement Manufacturers'' Association, said.