Declining profitability due to high cost of land acquisition, low premium of open market sales due to supply glut and increasing sales to power sector sacrificing demand from other consumers offering 20 per cent higher price for fuel – has impacted Coal India’s ability to hike workers’ salaries.

As the bipartite committee to meet for the eighth time this year on August 24 for settlement of the five-year National Coal Wage Agreement, effective from July 2016, the Coal India management is rigid that they cannot afford the past records of wage hike.

CIL offered 25 per cent hike taking minimum monthly compensation per employee to ₹25,000 in the previous agreement.

During the June 2017 quarter, CIL provided for ₹689 crore (annualised ₹2,800 crore) against the anticipated hike.

Trade unions are demanding a minimum 21 per cent hike (down from the initial demand of 50 per cent hike) that will inflate the annual wage bill by ₹4,500 crore from the existing ₹28,000 crore.

Interestingly, unlike in the previous years, CIL did not commit for percentage hike. “We have only mentioned that wages will be increased as per the fund availability. And, the balance-sheet is available in public domain,” a CIL source said.

Despite rising graph of coal production, CIL’s consolidated net was down by 54 per cent to ₹9,266 crore in 2016-17, compared to 2015-16. In fact, except for a four per cent jump in profit in 2015-16, CIL’s profits are declining since 2013-14 (₹15,116 crore).

Company sources point out that nearly direct employment against land acquisition, every year, is putting additional pressure on bottomline.

The company offers approximately 3,000 jobs a year against acquisition of land, over and above high cash compensation.

This coupled with lower margin on sales to power plants and a sharp low premium (over notified price) in the open market has impacted its operational margins.

The net margin is further impacted as the Centre sucked out the huge cash pile, previously earned huge interests.

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