Coal India annual profit rises 4%

Record coal production offset by increasing cost; net sales increased by 5% to Rs 75,644 cr during FY16

Coal India Ltd (CIL) touched record production of 539 million tonnes (mt) in FY16. A fall in coal prices and increasing costs, however, played spoilsport.

Net profit rose nearly four per cent to Rs 14,274 crore for the year ended March 2016. Profit during 2014-15 was Rs 13,727 crore.

Offtake was at a record high of 534 mt during 2015-16. Net sales increased five per cent to Rs 75,644 crore. “Volume growth helped in reducing the overall cost per tonne and maintaining margins, despite a fall in average realisations,” said CIL.

Over-burden removal, a performance criterion in exposing seams for future mining, jumped 30 per cent. During 2014-15, the growth was 9.9 per cent.

For the March quarter, net profit increased 0.2 per cent to Rs 4,248 crore from Rs 4,239 crore during the corresponding period of 2014-15. Coal production increased 8.8 per cent against 151.86 mt in the year-ago period.

However, CIL said its expenditure increased substantially and the price also with regard to volume came down.

“As a substantial part of the total expenditure is fixed in nature and due to an increase in volume of production, the cost per tonne shows positive decline of 3.5 per cent compared to the previous year,” said CIL.

Prices of coal fell in open market auctions and fuel supply agreements (FSAs).

FSA prices declined to Rs 1,311 a tonne during FY16 against Rs 1,327 a tonne in the previous year. The e-auction price fell to Rs 1,858 a tonne against Rs 2,450 a tonne in FY15.

“This, coupled with some decline in washed coal realisations, etc, resulted in the overall price realisation reducing during the year to Rs 1,418 a tonne from Rs 1,475 a tonne in the previous year,” said the company.

The cost for CIL increased mostly due to corporate social responsibility expenses, ex gratia payment to employees and contractual expenses, among others. It, however, made major savings in costs from continuous reduction in manpower (by natural attrition) and softening of fuel prices like diesel.