Bharat Coking Coal Limited valued years-old coal rejects at ₹135.15 crore in FY2025-26, but the CAG has questioned the basis used to determine the valuation rates.
New Delhi: Bharat Coking Coal Limited (BCCL) has valued old coal rejects lying at its washeries at ₹135.15 crore during FY2025-26 and included the amount in its inventory. However, the Comptroller and Auditor General of India (CAG) has raised questions over the methodology and rates used to arrive at the valuation.
The issue relates to coal reject that had remained in BCCL’s books for several years at nil value. The company subsequently brought the stock into inventory at a value running into hundreds of crores.
CAG Questions Different Valuation Rates
The audit has questioned why different rates were applied to different lots of coal reject.
According to the audit observations, some quantities were valued at around ₹410 per tonne, while other lots were valued as high as ₹695 per tonne. Some stock continued to be valued at zero.
The CAG sought clarification from BCCL on the specific basis for applying these different rates to coal rejects of a similar nature. The audit also asked the company to explain the assumed market price, saleability and other parameters considered while determining the valuation.
Focus on 4.70 Lakh Tonnes at Bhojudih Washery
The valuation exercise primarily involved approximately 4.70 lakh tonnes of old coal reject stored at the Bhojudih washery.
The material underwent grade analysis in accordance with Bureau of Indian Standards (BIS) norms. During FY2025-26, BCCL sold 88,069.25 tonnes of the reject.
The average realisation from these sales was approximately ₹377 per tonne.
BCCL used the sale of the material and prevailing market demand as important factors in determining the value of the older stock. However, the valuation rates applied to the remaining stock were higher than the average price actually realised from the reported sales.
BCCL Explains Its Valuation Method
Responding to the audit, BCCL said that the Bhojudih coal reject was analysed during FY2025-26 and that the sale of 88,069.25 tonnes also took place during the same financial year.
The company argued that the actual sale demonstrated the existence of market demand and saleability for the coal reject. Based on these factors, it considered the material capable of being assigned a value.
BCCL further stated that ungraded coal rejects lying at its other washeries were similar in nature and that the stock was valued after taking market demand and saleability into consideration.
₹135.15 Crore Forms Part of ₹3,046.88 Crore Inventory
As of March 31, 2026, BCCL’s total inventory stood at ₹3,046.88 crore, covering coal, by-products and other inventory items.
The ₹135.15 crore valuation of old coal rejects has been included in this overall inventory figure.
Importantly, the ₹135.15 crore represents the accounting value of the inventory and not revenue generated from sales. BCCL has not sold coal rejects worth ₹135.15 crore.
Company Refers to Existing Accounting Policy
BCCL has maintained that its accounting policy for valuing coal and coal by-products is already disclosed in its financial statements.
The policy includes the methodology used to determine the net realisable value (NRV) of stock, including coal rejects.
Based on this existing accounting framework, the company took the view that a separate detailed disclosure regarding the particular valuation exercise was not necessary.
What Are Coal Rejects?
Coal rejects are the unwanted material separated during the coal-washing process. They generally contain a high proportion of ash and relatively lower quantities of usable coal.
Their commercial value depends on factors such as quality, ash content, market demand and potential end use.
Why the CAG Observation Matters
The CAG’s observation is significant because the valuation involves a substantial amount of inventory that had previously been carried at nil value. The difference between the actual sale realisation and the higher rates used for valuing some of the remaining stock has prompted questions about the assumptions behind the valuation.
The matter highlights the importance of having a consistent, transparent and adequately supported valuation methodology for long-standing coal reject inventories.
Source: Audit observations concerning Bharat Coking Coal Limited and the company’s response for FY2025-26.
