Coal India reports 64% increase in Q1 profit
Aug 13, 2011
Business Line, Kolkata
Mr. N C Jha, Chairman, Coal India Ltd. - A Roy Chowdhury
Coal India today reported 64 per cent growth in net profit to Rs 4,144 crore in the April-June 2011 first quarter against the corresponding period last year. Of the Rs 1,618 crore incremental profit, nearly 30 per cent (Rs 478 crore) was contributed by rise in interest income against fixed deposits.
The company has a cash reserve of nearly Rs 51,000 crore (over $11 billion). According to the company, average interest rate against its fixed deposits has firmed up by nearly 3 percentage points. The interest earnings have largely off-set the impact of nearly Rs 201 crore higher tax outgo.
According to CIL Chairman Mr N C Jha, profit growth is expected to be “slower” in the July-September quarter due to provisioning for anticipated wage hike. Slated to start wage negotiation with the joint-bipartite committee — including the workers unions and management — from August 20, CIL is hopeful to complete the negotiations for a 5-year wage pact in 5-6 months.
The company took 13 months to complete the last wage negotiation resulting in a 24 per cent hike.
Coupled with a nearly 5 per cent higher off-take to over 106 million tonne through dilution of pithead stock, e-auction and the price rise effected in February 2011 were major contributors to profit growth.
While the revenue impact of price rise is estimated to be Rs 2,500 crore, CIL sold 2.05 million tonne more coal through e-auction route in the first quarter at 85 per cent higher than the notified price. Incidentally CIL effected an average 12 per cent price hike in February 2011.
During the quarter, profit grew by a mere 1.2 per cent to 96 million tonne (95 million tonne).
Net sales grew by 27 per cent to Rs 14,499 crore. The net profit to net sales ratio improved from 22 per cent in the first quarter of 2010-11 to 28.5 per cent.