Indian industry, including the power sector, may have to shell out higher prices for domestic coal in 2009-10.
Coal India Ltd, the country’s largest coal producer, seems to be considering price hikes primarily to compensate the approximately Rs 23 billion increase in annual wage bill beginning this fiscal year.
According to the company, Indian coal enjoys a 50-60 per cent price advantage over the landed cost of imported coal even after the recent meltdown. CIL effected its last price increase (10 per cent) in December 2007 after nearly three-and-a-half years.
Company Chairman, Mr Partha S. Bhattacharyya, said on Tuesday that the recently implemented National Coal Wage Agreement will increase the wage bill and other employee-related costs of CIL and its eight subsidiaries by Rs 18 billion a year. CIL and its subsidiaries have 433,000 staff.
The company is expecting a further increase of salaries and wages by Rs 4-5 billion a year if the pay committee recommendations are implemented.
“We are currently assessing the impact of the cost push – especially on the viability of the 124 new projects under way – vis-À-vis strategies to recover the higher expenses. The assessment will be complete in the next two to three months, depending on which we may take a call on price revision,” he said.
“Despite out best efforts, the increase in costs may not be fully recovered by increasing production and productivity,” Mr Bhattacharyya said, indicating that a price revision was inevitable especially to ensure the viability of the new projects that would play an instrumental role in meeting the rising demand for coal in the country.
The CIL Chairman said that the profits of the company would take a hit of Rs 52 billion only in 2008-09 due to implementation of wage agreement from July 1, 2006. An additional impact is expected once the pay committee recommendations for officers are implemented.
“Overall, we do not expect our profit before tax to remain less than Rs 5,000 crore [Rs 50 billion] for the year,” he said.
The company has so far posted a provisional PBT of Rs 76.67 billion (without provisioning for higher wages), approximately 60 per cent higher than the same period last fiscal. The gross value of raw coal produced has gone up by 22 per cent to a little over Rs 250 billion crore.
Asked about the Union Government’s decision to launch a fresh scrutiny on the accounts of CIL subsidiaries Bharat Coking Coal Ltd and Central Coalfields Ltd, Mr Bhattacharyya said he had asked for detailed report from both the subsidiaries. “According to the Director (Finance) of both the companies, apparently, there was no adverse remark by the CAG or delays in relevant disclosures,” he added.
Source: The Hindu Business Line
No comments:
Post a Comment