Ind-Ra assigns Global Coal and Mining 'IND A' rating with stable outlook

India Ratings and Research (Ind-Ra) Friday said it has assigned Global Coal and Mining Pvt Ltd (GCMPL) a long-term issuer rating of 'IND A and said that the outlook was stable. Instruments with the rating 'IND A' are considered to have an adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

GCMPL's coal beneficiation volumes improved to 5.2 million tonnes per annum (MTPA) in FY 2018-19, owing to an increase in capacity utilisation of its two washeries Talcher and IB Valley to 52 per cent and 51 per cent, respectively, the rating agency said in a statement. The improvement in capacity utilisation of the Talcher washery was due to the renewal of its contract with its key customer Andhra Pradesh Power Development Co Ltd (APPDCL).

The company had failed to renew its contract with APPDCL in July 2017 owing to the lack of clarity on the rates of taxes for discharge of tax liability post the implementation of the Goods and Services Tax in July 2017. As a result, the washery was closed from July 2017 to January 2018. GCMPL has 70 per cent of its beneficiation capacity tied up with various customers including APPDCL, West Bengal Power Development Corp Ltd and Singareni Colleries Company Limited. The contracts have duration of three years, the remaining life of the existing contracts ranges between two months and two years.

Since the existing contracts for Talcher and IB Valley washeries do not ensure guaranteed tied up volumes, any reduction in the beneficiated volumes will directly impacts the company's revenue and profitability. However, the management expects these contracts to get renewed timely due to the absence of other major washeries in the area and moderate-to-high entry barriers in the business. Global Coal and Mining Private Limited -- a coal beneficiation company --- currently enjoys a capacity of 10 million tonnes per annum through its 4 coal beneficiation plants or washeries.

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