Coal India Ltd (CIL) posted a 73 per cent rise in net profit to Rs 2,593 crore in the July-September quarter compared with the same period last year, riding primarily on higher interest income from Rs 45,000 crore of cash reserve.
The company earned an additional Rs 756 crore of interest in the second quarter vis-à-vis a total profit growth of Rs 1,099 crore.
Profit growth from operations was hit due to a nearly 10 million tonnes (11 per cent) shortfall in production compared to last year. Off-take was down by five per cent to 94 mt. Sales revenue, however, grew by 18 per cent due to higher price of coal when compared to same period on 2010.
“Production was affected due to nearly one-and-a-half to three times higher rainfall recorded in majority of our mining areas. The flooding was so heavy that some of the mines were dewatered till October,” the Chairman, Mr N.C. Jha, said in a late evening media conference.
Wage provisioning
Profit growth was also hit due to a lump sum provisioning of Rs 7,000 each for 3.63 lakh employees in view of the ongoing wage negotiation for National Coal Wage Agreement-IX. The last five-year wage pact expired on June 30.
“The provisioning formula was based on the total wage impact during the last agreement,” the Director Finance, Mr A K Sinha, said.
Brighter outlook
According to Mr Jha, the third quarter production outlook is “good”. “Though the production of October was impacted, the trend has reversed in November. We are expecting a growth for the quarter,” he said.
Meanwhile, taking a cue from the go ahead granted by the Finance Ministry for acquiring interest in “unlisted mining entities” abroad, the board of directors of the company today entrusted the job of scrutinising acquisition proposals to a special committee. “It's a board-level committee which should meet in a fortnight to review the proposals,” the CIL Chairman said.
As directed by the Coal Ministry, the company is also gearing up to adopt gross calorific value (GCV) -based pricing mechanism from January 1. “We are taking measures to equip ourselves to switchover to new mechanism,” he said, adding that the new model would be revenue neutral.