A laborer unloads coal at a wholesale market (Photographer: Dhiraj Singh/Bloomberg)  

Coal India Reports Lowest Quarterly Profit Since Listing

Coal India Ltd. (CIL), the world’s biggest coal miner, reported its lowest ever profit since listing on account of higher employee cost and lower realisation.

Net profit for the three months ended September 30 dropped 77.4 percent to Rs 600.4 crore from Rs 2,654.4 crore a year ago, the Kolkata-based miner said in a stock exchange filing. Revenue fell 7.7 percent to Rs 15,645 crore from Rs 16,957.6 crore last year.

The consensus of 18 analyst tracked by Bloomberg had estimated a net profit and revenue of Rs 2,263.5 crore and Rs 16,614.2 crore respectively. The company reported earnings based on the newly-introduced Indian Accounting Standards, which is in line with International Financial Reporting Standards.

State-run Coal India, which produces more than 81 percent of India’s coal, earned an average price of Rs 1,350 per tonne during the quarter, according to BloombergQuint’s calculations versus Rs 1,395 a year ago.

Earnings before interest, tax and depreciation fell 78.2 percent to Rs 742.6 crore, while the EBITDA margin contracted by 1,490 basis points to 4.6 percent for the September ended quarter. The company revises salaries of over 3,00,000 employees every five years, with the last revision taking effect from July 2011. This quarter the effect of salary hikes increased the employee cost by 14.6 percent to Rs 8,406.9 crore.

Coal production during the period fell 3.5 percent to 104.41 million tonnes, while shipments fell 5 percent to 115.93 million tonnes, according to provisional estimates by the company. The company continues to face subdued demand from power producers – which accounts for three-fourths of its shipments – due to high inventory levels.

Coal India sold about 16 percent of its produce in auction sales outside of long-term contracts. These sales are usually at a premium to the contract prices, which makes their contribution to earnings bigger than their share of sales volumes. A steep decline in electronic auction prices dragged the profit lower.

Coal India earned Rs 1,356 a tonne on auction sales, compared with Rs 1,804 a tonne a year ago. Average price for coal sold through term contracts stood at Rs 1,289 per tonne in the quarter ended September 30.

Year-to-date Coal India’s stock has fallen 7.2 percent, underperforming the Nifty Metal Index. Ahead of the earnings announcement, the stock shut shop on Tuesday at Rs 305.95 apiece. Sixty-eight percent of analysts tracked by Bloomberg have a buy rating on Coal India, according to Bloomberg.