Coal e-auction premiums at Coal India’s Mahanadi Coalfields (MCL) and South Eastern Coalfields (SECL) have weakened sharply even as both subsidiaries offered more coal through auctions, exposing a significant change in how incremental revenue is being generated ahead of their proposed initial public offerings.
The figures in the draft red herring prospectuses (DRHPs) show that the issue is not simply one of auction volumes. MCL offered 72.26 million tonnes of coal through e-auctions in 2025-26, compared with 28.65 million tonnes in 2023-24. Yet the quantity booked increased only from 22.86 million tonnes to 26.49 million tonnes. The result was a steep fall in the share of offered coal that found buyers, from nearly 80 per cent to around 37 per cent.
At the same time, MCL’s average premium over the notified price fell from ₹802 per tonne in FY24 to ₹274 per tonne in FY26, a decline of nearly 66 per cent. Incremental revenue generated through these premiums declined 60 per cent, from ₹1,833 crore to ₹728 crore. For a company preparing to approach public-market investors, this distinction between volumes offered, volumes booked and revenue realised is central to understanding the quality of growth.
The data points to a market in which putting more coal up for auction did not translate into proportionately stronger demand. MCL more than doubled the quantity offered over the two-year period, but the quantity booked rose by only about 16 per cent. The gap between supply made available and supply actually booked widened substantially. This indicates that the additional auction availability was not absorbed at the earlier pace or at the earlier premium levels, based on the figures disclosed in the DRHP.
The effect was also visible at SECL, Coal India’s second-largest subsidiary by production. Its average premium declined from ₹911.61 per tonne in FY24 to ₹631.94 per tonne in FY26, a reduction of around 31 per cent. The quantity offered through e-auctions increased from 30 million tonnes to 49 million tonnes, while the quantity booked rose from 26 million tonnes to 29 million tonnes. Its booking rate consequently fell from around 86 per cent to 59 per cent.
SECL’s own explanation is important because it separates higher participation from higher pricing. “Although booked quantities increased significantly during Fiscal 2026, the average premium over notified price moderated relative to earlier years, resulting in lower incremental revenue per tonne,” the company said in its DRHP. It described the movement as a “normalisation of e-auction premiums despite increasing auction participation”.
That language suggests that the earlier premium levels were not being treated as a permanent feature of the market. E-auction prices are determined by demand and supply, unlike coal sold through fuel supply agreements, or FSAs, where prices are set by Coal India. When demand is strong relative to the coal available in an auction window, buyers bid above the notified or benchmark price. When the balance changes, the premium can narrow even if the seller continues to offer large quantities.
This makes the sales mix as important as the headline production or dispatch number. Coal India’s subsidiaries sell mainly through FSAs and competitive e-auctions. FSAs provide a more stable revenue route because prices are set by the company, while auctions provide the possibility of higher realisation through premiums. The trade-off is that auction-linked revenue is more directly exposed to changes in buyer demand and bidding intensity.
MCL attributed part of the moderation in its average sales realisation to a change in this mix. A higher proportion of coal was sold under FSAs at notified prices, while the contribution from e-auctions, where buyers pay a premium, declined. MCL’s FSA dispatches increased from 177 million tonnes in FY24 to 187 million tonnes in FY26, a growth of 5.6 per cent.
The available figures therefore describe two different forms of performance. FSA dispatches increased, supporting the stable supply side of Coal India’s business. But the higher-margin opportunity represented by e-auctions weakened. The development does not establish that total coal demand declined, nor does it show that the subsidiaries’ operating performance deteriorated across every metric. It does show that the ability to secure premium pricing through auctions was lower in FY26 than in FY24.
For infrastructure and industrial users, the auction mechanism matters because coal is a critical input into India’s power and industrial systems. The DRHP figures do not provide a complete account of demand across those sectors, but they do show how coal availability is being channelled through different commercial routes. A larger auction offer can improve access for buyers outside long-term supply arrangements, yet a lower booking rate means that availability alone does not guarantee market absorption.
The institutional structure also shapes the outcome. MCL and SECL are subsidiaries of Coal India and rank first and second among its subsidiaries by coal production, according to the supplied report. Their proposed IPOs would involve the parent company diluting part of its stake. That makes the DRHP disclosures more than a routine pricing update: they give prospective investors visibility into how each company converts production and dispatches into realised revenue.
For public-sector listings, the distinction between notified-price sales and premium-based sales can influence how investors read the durability of earnings. A notified-price route offers greater stability but limits the upside from competitive bidding. An auction route can generate higher realisation, but its outcome depends on the relationship between the quantity offered and the willingness of buyers to bid. The FY24-to-FY26 comparison shows that the second route produced less incremental revenue per tonne at both subsidiaries.
The contrast between MCL and SECL is also revealing. MCL experienced the sharper decline in premium, falling by nearly two-thirds, while its booking rate dropped from nearly 80 per cent to around 37 per cent. SECL recorded a smaller premium decline, but its booking rate still fell from around 86 per cent to 59 per cent. In both cases, the direction was the same: more coal was offered, but a smaller proportion of the offer was booked and the premium over notified prices moderated.
These numbers caution against using auction offer volumes as a standalone measure of market strength. An increase in offered coal can reflect a decision to make more material available through the auction channel, but the more relevant commercial indicators are the tonnes booked, the booking rate and the premium achieved. Taken together, the MCL and SECL disclosures show that supply expansion through auctions did not preserve the pricing conditions seen in FY24.
The data also clarifies what remains uncertain. The supplied DRHP information does not identify the specific buyers whose bidding weakened, establish whether the change was driven by individual coal grades or regions, or provide a longer explanation of the demand conditions behind the lower premiums. It also does not state how the auction performance will evolve after FY26. The disclosures establish the movement in premiums, volumes and booking rates, but not a definitive cause beyond MCL’s sales-mix explanation and SECL’s description of premium normalisation.
The immediate significance for the proposed IPOs is therefore one of transparency. Investors will need to distinguish stable dispatch growth under FSAs from variable revenue generated through e-auctions. For the wider infrastructure system, the figures show how the commercial design of coal supply affects both buyer access and producer realisation. The next important disclosures will be the companies’ final offer documents and any updated operating data that show whether auction booking rates and premiums stabilise, recover or remain below their earlier levels.
