Profit-sharing to eat extra Rs 2,200 cr from CIL's net

Coal India's annual consolidated net will get eroded by around Rs 2,200 crore once the draft MMDR Bill that obligates coal miners to share 26% of their profits with project-affected people is implemented.

"As part of our CSR policy, we spend Rs 5 per tonne, or 5% of the net profit, whichever is higher, with the project affected people now," a company spokesperson told PTI.

The state-owned miner, which accounts for 81% of the country's total production of coal, had reported a Rs 10,867 crore consolidated net profit in 2010-11.

Since it already shares 5% of its net profit with the project-affected people, the additional impact would be 21%, or a little over 2,200 crore, considering the bottomline of the company remains around the same level.

Meanwhile, the stock of the company plunged by 8.12% in Friday's trading session on the Bombay Stock Exchange (BSE) to Rs 362 per share.

"The additional burden could see further selling by the investors in the next few days," an analyst said.

A few Foreign Institutional Investors (FIIs) may also press the "Sell" button on the company stock in the coming days, he said, however, adding that the stock would continue to remain an attractive one in the medium to long-term.

As of June-end, FIIs held a 6.37% stake in Coal India, raising their stake by 0.28% since the end of March.

The ministerial panel, headed by Finance Minister Pranab Mukherjee, approved the Mines and Mineral (Development and Regulation) Bill, 2011, according to which coal miners would have to share 26% of their profit and non-coal miners 100% royalty with the project-affected people.

The draft Bill will be sent for Cabinet approval soon.