NEW DELHI – India's second-largest coal producer Singareni Collieries will open the country's biggest underground mine next month with a capacity of 2.8-million tonnes per year, which should help the firm edge past its output target for this fiscal year.

Singareni's better-than-expected output will ensure sufficient supplies to south India-based power plants it caters to, at a time when the country is facing a severe shortage of coal. Nearly half of India's power plants have less than a week's stock of the fuel.

Singareni's output is just about 10%of what Coal India, the world's largest miner, digs out. But its small size and focus on one state, Telangana, has helped it beat its production targets for years, unlike Coal India that has its mines across the country.

Sutirtha Bhattacharya, Singareni's chairman, told Reuters on Monday the company will be able to produce about 1-million to 1.5-million this fiscal year from the new underground mine. Most of India's mines are easy-to-operate open cast pits.

The company expects to produce a total of 55-million tonnes in the current fiscal year ending March 31, 2015, and 56-million the year after that. Its target for the current fiscal year was 54.5-million.

"We are the only company to provide more than 100 percent of what we commit to our power customers," Bhattacharya said. "We also make up for others' deficits and help in lowering imports."

Most of the power plants with critical stocks are suffering from low levels of supply from Coal India, which is struggling to raise output as rains slowed activity in some mines.

Coal India fell short of its production target of 183.9-million tonnes for April-August by eight-million tonnes. The company fears it may not be able to meet its commitment of supplying 408-million tonnes to power firms this fiscal year.

The inability of Coal India - accounting for 80% of the country's coal output - to raise production fast enough has made India the world's third-largest coal importer despite sitting on the fifth-largest reserves.