Higher expenses hit CIL profit

However, the total income increased 5.5% to Rs 1,759 cr

Coal India (CIL), the world’s largest coal miner, posted a one per cent dip in net profit for the second quarter ended September, owing to a rise in contractual expenses including salaries for workers and fuel bill, and lower realisation from e-auction sales.

The Kolkata-based miner reported a net profit of Rs 3,052.3 crore during the quarter compared to Rs 3,078 crore in the year-ago period. Net sales of the company rose six per cent to Rs 15,411.4 crore between July and September this year compared to Rs 14,572.5 crore in the same period last year.

“Despite the growth in sales, our average realisation came down during the second quarter to Rs 1,418 a tonne, compared to Rs 1,437 a tonne last year, largely due to the reduction in e-auction realisation. The increase in notified price announced in May helped,” said CIL’s chairman and managing director S Narsing Rao.

He added the overall cost of production jumped by Rs 301 crore to Rs 13,112 crore during the quarter under review. “While the diesel cost increases by up to eight per cent every year as a general trend, the rise has been slightly higher this year.”

The firm’s production during the quarter rose 10 per cent to 98 million tonnes (mt), year-on-year. E-auction sales rose 20 per cent to 12.8 mt, accounting for 11.8 per cent of total sales volume. However, e-auction realisation declined from Rs 2,460 a tonne in the second quarter of the last financial year to Rs 2,220 a tonne this year.

“This dip in realisation is due to the demand slump in the manufacturing sectors of cement and sponge iron,” said Rao. Coal India’s premium over notified prices garnered through spot sales have come down to 39 per cent this financial year, compared to 59 per cent premium in FY13.

Rao added the company may have to import only 5-6 mt of coal for power utilities in FY14 as power companies have shown no firm intent for imported coal supply under the reworked fuel supply agreements (FSAs). He added the company is not mulling any price at the moment.

The firm’s share price at the Bombay Stock Exchange (BSE) closed at Rs 284.9 apiece on Wednesday, down 0.05 per cent from the previous close.