Steep hike in cess to pay for higher pension costs darkens outlook for CIL

JP Morgan recently cut the per-share target price of the state-owned firm by almost Rs 35, largely on account of a 250 per cent increase in cess on each tonne of coal output

Financial services firm JP Morgan earlier this week cut the target price of Coal India (CIL) to Rs 395 from Rs 430 per share. While the price is still well above the quoted Rs 361.25 on the National Stock Exchange (NSE), the cut explains the challenges that the state-owned firm faces, and which are mounting even as coal consumption in the country continues its upward march.

One of the key reasons for the cut is the 250 per cent rise in the cess imposed on the firm to pay for the pension liabilities of its former employees. The cess was raised