Coal India Q4 profit drops 18% on wage bill; record net profit in FY23

Coal India Ltd, the world’s largest coal miner, on Sunday reported a 17.7 percent drop in net profit for the March quarter due to higher provisions for staff pay review.

Consolidated net profit of ₹5,527.62 crores, or ₹8.98 crores per share, in the January-March period was compared to ₹6,715 crores, or ₹10.86 crores per share in the same period in the previous year, according to the company’s filing with stock exchanges.

The decline in earnings in the fourth quarter of 2022-23 (April 2022 to March 2023) was despite coal being produced and sent to users.

The company said non-executive salaries would be reviewed from 1 July 2021 and pending finalization of the remuneration agreement with the unions, savings of Rs 5,870.16 crore were made in the quarter.

This was compared with a provision of Rs.475.28 crore in January-March 2022. For the full financial year 2022-23, Coal India made a provision of Rs.8,152.75 crore as against the Rs.1,080.97 crore made in the previous financial year 2021-22.

Coal production rose 7 percent to 224.16 million tons in the quarter ended March 31. Production increased to 186.877 million tons in the quarter, compared to 180.249 million tons in the period ending March 31, 2022.

The Board of Directors of the company declared a final dividend of Rs 4 per share for the financial year. The company had previously declared a ₹15 per share and ₹5.25 per share interim dividend.

Sale increased at Rs.35,161.44 crore in the fourth quarter from Rs.29,985.45 crore in the previous year. Coal India is in negotiations with employee unions for a pay review. Workers are seeking a 47 per cent wage increase while Cool India has offered a 3 per cent increase.

Its salary bill was Rs 49,409 crore in the 12 months ended March, up about 22 per cent over the previous year. The company, which is facing higher production costs, has spent more than a third of its revenue on salaries.

Wages for non-executive workers, who make up 94 percent of Coal India’s workforce, are reviewed every five years. The increase is scheduled to begin in July 2021. In 2017, CIL signed a wage agreement with trade unions that proposes a 20 percent increase in salaries for five years.

The total workforce of Coal India is 2.59 lakh. Of these, about 15,000 are executive staff. Later in a statement, the company said that the net profit for the financial year 2022-23 registered a massive growth of 62 percent at Rs.28,125 crore.

“This was despite Rs. 8,153 crore being made in the accounts in the 2022-23 pay review of CIL’s non-executive workforce,” the company said.

This is the company’s highest ever net profit, beating the previous best of Rs 17,464 crore in 2018-19. It added that net profit in the fourth quarter shrank “due to an increase in wage provisions”. “PAT would have been the highest profit ever in any quarter had the provision not been made.”

Earnings have risen despite the company covering coal prices for the past five years amid rising input costs, particularly diesel and explosives and an increase in the cost of wages due to savings in the accounts.

Although e-auction sales at 16.40 million tons were down 41 percent by volume in the fourth quarter compared to 27.65 million tons in the corresponding quarter in FY22, higher premiums under the e-window helped CIL increase e-auction sales by 690 rupee. The statement said crore.

“The realization per tonne of coal was Rs 4,526 in the auction section in the fourth quarter as against Rs 2,434 in the same quarter of FY22. The jump was Rs 2,092 per tonne or 86 per cent.