The Rs 5/litre diesel price hike should hit the bottomline of Coal India Ltd by Rs 600 crore.
“The impact (of diesel price hike) will be Rs 120 crore for every rupee increase for a litre of diesel. If the hike is Rs 5, then the impact would be Rs 600 crore a year,” CIL Chairman, S. Narsing Rao, told newspersons on the sidelines of the annual general meeting here today.
Asked if the hike in cost of production would be passed on to its customers, Rao said, “We will review it. Not every increase in input cost will lead to price increase.”
Considering that it posted a Rs 14,788 crore profit in 2011-12, the impact of fuel hike is limited to four per cent of the profit after tax. CIL spent a little over Rs 2,000 crore on fuel and power in the last fiscal.
Earlier responding to shareholders’ queries on the possibility of getting more coal reserves, he said, “If at any time, the Government of India de-allocates any block, then they might give some or most of it to us.”
Though he preferred to refer to it as his “assumption,” Rao clearly expects CIL to make the most out of the ‘coalgate’ controversy and the recent spate of de-allocation of blocks from private users.
In 2011, the company sought allocation of 116 blocks, which is still under consideration of the Government.
Briefing newspersons after the board meeting, Rao said the company had sought suggestions from consumers and private power producers on pooling price of imported coal with domestic produce.
On August 31, the board asked the company to enter fuel pacts with generation utilities commissioned after March 2009, with provision to supply 15 per cent (aggregate) imported coal on cost-plus basis, till a ‘viable ‘business model’ for pooling is approved.
“Price pooling is in the process. But, as of now somebody who comes in, will have to go for cost-plus basis, until the price pooling mechanism is in place,” he said adding that the company’s legal and financial interests would not be jeopardised on the FSA issue.