Higher despatches to the non-power sector coupled with an increase in washed coal prices helped Coal India post a 22.28 per cent rise in its net profit for the quarter ended June 30, 2019, at Rs 4,629.87 crore.
The company's net profit during the corresponding quarter of the last fiscal year stood at Rs 3,786.44 crore. Despite flat sales volume, higher prices drove the company’s sales revenue to rise by 3.64 per cent to Rs 23,223 crore.
According to a senior Coal India executive, while sales and production volume remained flat, the company had hiked prices of washed coal in the winter of 2018 which directly led to an improvement in its margins. It was backed by increased supplies to the non-power sector where prices are higher by 20 per cent over the notified price for the power sector. "These two factors majorly contributed towards improvement in profitability”, the official said.
The average realisation per tonne from washed coal shot up from Rs 2,427 in the first quarter of Q1FY19 to Rs 3,171.15 during the same period of the current fiscal year.
The company’s revenues from fuel supply agreement also improved by 4.34 per cent to Rs 1,369.96 a tonne.
However, global trends kept coal prices muted at auctions where prices fell by 10.16 per cent to Rs 2,155.26 crore. “However, what we lost in the e-auctions, we were able to make it up for in higher sales to the non-power sector. Moreover, margins improved from by-products too”, the company executive said.
While the sales volume of by-products increased by around 10 per cent, prices shot up substantially from Rs 2,943 per tonne to Rs 3,662.28 per tonne.
On the other hand, the maharatna company was also able to reduce its expenses by 1.01 per cent to Rs 19,077.44 crore despite a 3 per cent hike in salaries and higher contractual expenses.
Finance costs dropped from Rs 110.34 crore to Rs 16.57 crore, while employee benefit expenses increased from Rs 9,598.21 crore to Rs 9,895.65 crore.
However, the company’s auditor, Ray & Ray, said that in case of Northern Coalfields and Central Coalfields (CCL), certain balances of loans, other financial assets, trade receivables, other current & non-current assets, trade payables, other financial liabilities and other current liabilities have not been confirmed while CCL carries a contingent liability of Rs 13,389.38 crore towards penalty for mining coal in excess of environmental clearances limitation in 41 mines.