Coal India and its subsidiaries are helping each other with loans to be able to pay salaries and tide over the acute liquidity crisis from rising dues from consumers and falling cash flow during the lockdown.
Coal India has lent Rs 300 crore to subsidiary Central Coalfields while Bharat Coking Coal is in talks with subsidiary Northern Coalfields for another Rs 300-400 crore loan in order to meet working capital requirements, including salaries. Central Mine Planning & Design Institute, the exploration arm of the company, has also been given a Rs 15 crore loan for salary payment of its executives by Coal India.
Coal India’s sales dipped 26 per cent in April. Among its seven producing subsidiaries, Central Coalfields and Bharat Coking have suffered a substantial fall in sales while dues from power companies have crossed Rs 3,000 crore for each during the lockdown. This has resulted in acute fund shortage for both the companies. They cannot currently cover their fixed costs including salaries and statutory payment obligations fully.
Bharat Coking Coal is also in talks with banks for Rs 400-500 crore, which they are planning to raise through bill discounting on their past dues from power firms. Since the loan is yet to come, the subsidiary has initiated dialogues with other subsidiaries for either loans or transfer of funds.