State-owned Coal India Ltd (CIL) reported a 7.5% fall in coal production to 169.6 million tonnes in Q1 FY27 — yet its offtake (coal actually dispatched and sold to customers) rose 3.5% to 197.7 million tonnes over the same period, as power demand hit record highs during a brutal summer heatwave.
At first glance, this looks like a riddle: CIL dug up less coal, but sold more of it. How?
The answer is inventory — and it's one of the most important distinctions a CFO ever draws. Production is what comes out of the ground. Offtake (think: dispatches to power plants and other buyers) is what gets shipped and recognised as revenue. The gap between the two is stock — coal sitting at mine pitheads or in transit.
CIL had been building inventory for months, anticipating strong summer demand. So when a record heatwave hit and power demand surged 11.6% in June, CIL simply drew down that stockpile. Production fell; revenue-generating dispatches rose. The P&L looked better than the operational picture.
Here's the CFO lens: revenue is recognised on delivery, not production. A company that produces 1,000 units but ships 800 books ₹0 on the 200 it kept in the warehouse. Conversely, CIL shipped MORE than it produced this quarter — living off prior-period inventory.
This is why I always tell founders: never confuse output with revenue. Your factory running at full capacity means nothing until the goods leave the door and a customer takes title. Watch your offtake, not just your production report — that's where the cash actually begins.
📚 Learn the concept: Revenue
Source: https://hdfcsky.com/news/coal-india-q1-output-falls-7-5percent-despite-higher-demand
▶ Play the 90-second CFO game All daily posts