A Case Sduty Of "Shanxi Coal Industry" Successfully Coping With Financial Difficulties Under The Reform Of Supply Side

The coal industry developed rapidly from 2002 to 2012.After 2012,with the slowdown of economic growth,coal demand decreased,coal industry overcapacity appeared,and coal price plunged.The extensive operation mode of listed coal enterprises,which has been focusing on output but neglecting management for a long time,is no longer applicable.Problems such as backward production technology,redundant personnel,high cost and weak product competitiveness become prominent.A large number of listed coal enterprises suffer serious losses and fall into financial difficulties.In order to help the coal industry out of the predicament,the country proposed the supply-side structural reform at the end of 2015,requiring that the coal production capacity and layout should be optimized from 2016,and the coal enterprises should be helped to recover from the difficulties as soon as possible and embark on the road of high-quality development within 3-5 years^[1],which is called the first stage of supply-side reform（2016-2020）by the author.Now five years have passed,the development of listed coal enterprises has improved,but the overall financial recovery is not optimistic.According to the data analysis of Oriental Fortune,5 listed coal enterprises suffered serious losses again in 2020,and 62%of the remaining listed coal enterprises were still in the bankruptcy zone with Z-value,while only 4 enterprises entered the safety zone.The 14th Five-year Plan（2021-2025）released at the end of 2020 once again mentioned that China will continue to focus on supply-side structural reform in the next five years,which means that the second stage of supply-side reform is about to begin.At the same time,the country also put forward the"2030 carbon peak,2060 carbon neutral"strategic goals,which put forward higher requirements for the development of coal enterprises,can predict the coal industry will be increasingly fierce competition in the future.Under such a background,listed coal enterprises urgently need to find effective ways to adjust their financial status and meet the challenges.Shaanxi Coal Industry,which had a good financial recovery during the first stage of supply-side reform and was representative in terms of enterprise nature and main products,was selected as the case study object of this paper.This enterprise was also affected by industry fluctuations and suffered serious losses in 2015.During the first stage of supply-side reform,Shaanxi Coal industry adopted a series of strategies to cope with financial difficulties,which gradually improved its financial situation and became the only state-owned listed coal enterprise whose Z value entered the safety zone in 2020.This paper hopes to provide reference for other enterprises by studying the financial dilemma coping strategies and effects adopted by Shaanxi coal industry during the first stage of supply-side reform.This paper first sorts out the causes of financial distress,coping strategies and relevant research on the financial distress of coal enterprises under the reform of the supply side,and comments on the research status.This paper comprehensively uses the methods of literature,case,financial index analysis,combined with the announcement of Shaanxi Coal Industry company and the data in the database for analysis.Through the analysis,it is found that its financial distress is manifested as weak profitability,debt repayment and operation ability,and the risk of bankruptcy increases.The external reasons leading to the financial predicament of Shaanxi coal industry are mainly the imbalance between supply and demand of coal industry,while the internal reasons include single business structure,improper resource allocation,more backward production capacity,weak cost control and so on.In this regard,during the first stage of supply-side reform,Shaanxi coal industry adopted strategies such as stripping loss-making assets,refining cost control,changing marketing strategies and upgrading coal technology.Through the comparative analysis of financial indicators,market share and sales volume before and after the implementation of shanxi coal industry coping strategy,the implementation effect is evaluated.Through comparative analysis,from the implementation effect of single coping strategies,shanxi coal industry adopted coping strategies have achieved positive results.From the comprehensive implementation effect,shanxi coal industry’s profitability,solvency and operational capacity have been significantly improved,and the bankruptcy risk has been significantly reduced.Finally,according to the case study of shanxi coal obtained the diversified business structure can help enterprises to avoid financial distress,asset stripping losses can help enterprises in the short term to get rid of financial difficulties and intensification cost control can help enterprises to avoid financial distress,to establish long-term relationship for helping companies cope with financial difficulties,the technical innovation is advantageous to the enterprise long-term development,Hope to provide reference for other enterprises.