Coal India may cut prices of premium grades coal

KOLKATA: State-run Coal India has reported a 35% increase in quarterly profits, helped by higher output, and said it is mulling a price cut for its premium grades of coal to bring them on a par with the imported varieties.

The Kolkata-based miner on Monday said profit after tax for the January-March period stood at 5,413 crore compared with 4,013 crore a year ago. Net sale for the period stood at 19,904 crore, up 2.4% from the same quarter a year ago.

The Rise in PAT was mainly due to an increase in supplies and a diluted effect of increase in salaries. In the fourth quarter of 2011-12, Coal India had made a large provision for salary hike, which was due. In 2012-13, this provision was diluted as effect of the increased salaries, announced towards the beginning of 2012-13, was distributed between the four quarters.

The company's fourth-quarter sales rose despite a decline in average realisation per tonne of coal to 1,511 per tonne, compared with 1,530 per tonne a year ago.

Regarding price cuts, a senior Coal India director said that grades with energy content above 4,600 kilo calories supplied by CIL are turning out to be either costlier or at par with coal imported from Australia and South Africa.

The director, who did not wish to be named, however, said, "No decision has been taken yet, but CIL may bring down prices of higher grades of coal as it is finding no takers and subsidiaries that produce such grades are suffering financially as a result."

Coal India chairman S Narsing Rao said, "The board, which reviewed the results of the monopoly also reviewed prices of premium quality coal produced by CIL subsidiaries Eastern Coalfields and South Eastern Coalfields in the backdrop of international prices of same quality of coal imported from South Africa and Australia."

The decline in the company's sales realisation during the quarter was mainly due to a large fall in average realisation of coal sold through e-auctions. Sales realisation through e-auctions declined to 2,308 per tonne during the fourth quarter compared with 2,851 per tonne a year ago.

Coal India's PAT for 2012-13 rose 17.37% from a year ago to 17,356 crore, mainly due to a 7% rise in off take and a 2% rise in net realisation to 1,472 per tonne, as more of higher grade coal was sold.