Low price realisation from e-auctions, fuelled by depleting interest income from banks on its cash reserves, in a situation when the demand of the fossil fuel is at a low, resulted in state-owned miner Coal India posting a decline of 14.78 per cent year-on-year in its net profit at Rs 3,065.28 crore for the quarter ended June.
This was also lower than the Street expectation of Rs 3,567 crore, as indicated by Bloomberg consensus estimate.
While the company’s total income or net sales fell 6.12 per cent at Rs 17,796.05 crore for the period under review as against Rs 18,955.75 crore in the year-ago quarter, the total expenses (including depreciation) in the quarter also came lower by 3.18 per cent to Rs 14,834.20 crore.
Earnings before interest, tax, depreciation, and amortisation (Ebitda) at Rs 4,255 crore still were not able to match consensus estimate of Rs 4,802 crore, going by Bloomberg poll of analysts.
“Higher dividend payout has eroded cash reserves due to which other income fell,” a Coal India official said.
Although sales volume improved marginally in the quarter by 2.9 per cent at 133.19 million tonnes, lower income from e-auctions brought down total income. The price realisation from e-auction was down by Rs 614 a tonne during the first quarter of the 2016-17.
“Also, we were able to sell 20 mt less quantity in the April-June period”, the official said adding that the demand for coal from the country’s power plants remains subdued. These apart, lower sales of its high grade coal impacted the company’s top line. However, with China cutting down its production by 9.7 per cent in recent times thereby pulling up global prices, Coal India is hoping of posting better results in the coming future.