Coal India ups non-coking coal prices, expects to earn Rs 64 bn in Q4

Coal India (CIL) has raised non-coking coal prices by an average of nine per cent to stave off the impact of increasing wages of around 0.3 million employees.

This is expected to cover the increased expenses, while providing the company headroom to step up capital expenditure for mining operations. CIL’s annual expenses increased by an estimated Rs 64 billion after it decided to revise wages for executive and non-executive employees. While it has provisioned around Rs 27 billion for the higher wages, it still faced nearly 60 per cent cash crunch.

Company officials were of the view that the increase would next year fetch Rs 64.21 billion of additional revenue, exactly the increase in its annual outgo, and would only balance the deficiency in income-expenditure. “It is mostly revenue neutral in nature and would help to balance the increased outgo,” a company official said.

Although the prices of higher grades have been reduced by 2.1-4.7 per cent, the price was increased by 20.4-21.9 per cent for the G6-G7 grade. The price of coal sold in the G11-14 bracket has been increased by 13.5-17.9 per cent. The country’s power and cement sectors primarily use coal in the G6-7 and G11-14 brackets.

CIL’s previous price revision was in May 2016, a 6.2 per cent increase on an average.

Wages and other employee benefit expenses accounted for 48 per cent of the cost overhead of the company, which has risen by 49 per cent since 2011 at Rs 296.60 billion.

The company’s net profit dipped nearly 15 per cent at Rs 92.66 billion during 2011-2017.

Coal India Ltd