Coal India Net Rises as Modi Electricity Plan Boosts Growthby
Third-quarter sales climb 6.8 percent to 189.7 billion rupees
Employee costs decline 1.8 percent to 73.5 billion rupees
Coal India Ltd., the world’s largest producer of the fuel, posted a third-quarter profit increase as Prime Minister Narendra Modi’s goal of expanding access to electricity boosted demand.
Profit for the three months ended Dec. 31 climbed to 37.18 billion rupees ($545 million), from 32.62 billion rupees a year ago, the miner said in a stock exchange filing. That beat an average forecast of 34.5 billion rupees by 26 analysts compiled by Bloomberg. Sales rose to 189.7 billion rupees from 177.6 billion a year ago.
The Kolkata-based state-run company is trying to meet a government-set target of doubling its annual output to 1 billion metric tons of coal in four years that is key to achieving Modi’s goal of providing electricity to every household in India. Competition has intensified among global suppliers amid a glut that has pushed prices to near the lowest in nine years.
Coal India sold 138 million tons of the fuel in the third quarter, while producing 144 million tons, according to separate statements. Average revenue per ton fell to 1,375 rupees from 1,426 rupees a year ago, while shipments increased 10.8 percent.
A 1.8 percent drop in employee costs to 73.5 billion rupees aided earnings, said Pritesh Jani, an analyst at Religare Capital Markets Ltd. in Mumbai.
“The drop in wage costs was a surprise and one would look for more clarity on whether employee expenses are on their way down,” Jani said by phone. “The drop helped offset lower prices to some extent.”
Independent electricity producers in India, the company’s biggest consumers, have been running plants below capacity as money-losing regional power distributors cut purchases. Power Minister Piyush Goyal last month said Coal India may need to curtail production and that it should consider reducing prices to clear stockpiles.
Thermal coal at Australia’s port of Newcastle, the regional benchmark, was at $49.14 a ton in the week ended Feb. 5, according to data from Globalcoal. Prices last month fell to the lowest since November 2006.