Coal India Profit Drops as It Preps for Retroactive Pay Raisesby
Company’s 3Q profit falls 20 percent to 28.84 billion rupees
Employee cost increased 10 percent to 82.3 billion rupees
Coal India Ltd., the world’s biggest producer of the fuel, reported a 20 percent decline in third-quarter profit as employee costs increased after the company set aside cash for expected retroactive salary increases.
Profit for the October-December period dropped to 28.84 billion rupees ($431.7 million) compared with 36.17 billion rupees a year earlier, the Kolkata-based state miner said in an earnings release Saturday. The profit lagged an average estimate of 30.59 billion rupees from 16 analysts compiled by Bloomberg.
The company’s employee cost rose more than 10 percent to 82.3 billion as it set aside funds during the quarter to cover potential salary increases for its non-executive employees, which totaled almost 300,000 at the end of 2016.
Coal India did not disclose the provision it made during the quarter but said for the nine-month period ended December, the total amount set aside was 14 billion rupees. On this account, it had made a temporary provision of about 7.1 billion rupees in the first six months of the fiscal. Pay levels are revised every five years and management is negotiating with unions over the changes, which will be retroactive from July 2016.
Salary provisions offset gains from higher shipments and an increase in prices, which together boosted net sales 4 percent to 197 billion rupees. Other income, mostly earned by investing its cash, fell by almost 16 percent to 11.17 billion rupees.
Coal India, which produces more than 80 percent of India’s coal, has lagged behind its production target during the year started April 1, after supplies of the fuel outpaced demand from its customers. The company has produced 433.76 million tons in the 10 months ended Jan. 31, falling behind its target of 478.57 million tons.
- The company earned an average 1,381 rupees a ton on sales compared with 1,376 rupees a year ago, according to Bloomberg calculations.
- Total expenses rose about 12 percent to 172.6 billion rupees from 154.3 billion rupees a year ago, according to the filing.
- Coal shipments during the quarter rose to 142.67 million metric tons from 137.89 million tons a year earlier, according to the filing.