Coal India Ltd, the world's largest coal miner, on Sunday reported 17.7 per cent drop in its March quarter net profit on higher provision made for wage revision of employees.
Consolidated net profit of Rs 5,527.62 crore, or Rs 8.98 per share, in January-March is compared with Rs 6,715 crore, or Rs 10.86 a share earning in the same period a year back, according to the company's filing with stock exchanges.
The decline in profit in the fourth quarter of 2022-23 (April 2022 to March 2023) was despite coal production and dispatches to users.
The company said salaries for non-executives are due for revision from July 1, 2021 and pending finalisation of a wage agreement with unions, a provision of Rs 5,870.16 crore has been made in the quarter.
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This is compared with Rs 475.28 crore provision in January-March 2022. For the full 2022-23 fiscal, Coal India made a provision of Rs 8,152.75 crore as against Rs 1,080.97 crore provided in the previous 2021-22 financial year.
Coal production rose 7 per cent to 224.16 million tonne in the quarter ended March 31. Offtake increased to 186.877 million tonne in the quarter as compared to 180.249 million tonne in the period ended March 31, 2022.
The company board of directors declared a Rs 4 per share final dividend for the fiscal. The firm had previously declared Rs 15 a share and Rs 5.25 per share interim dividends.
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Sale was up at Rs 35,161.44 crore in Q4 from Rs 29,985.45 crore a year back. Coal India has been in negotiations with the employee unions for wage revision. Workers are seeking a 47 per cent increase in wages while Coal India has offered a 3 per cent raise.
Its salary bill was Rs 49,409 crore in the 12 months ended March, about 22 per cent higher from the previous year. The company, which is facing higher production costs, spent more than a third of its revenue on salaries.
Wages of non-executive workers, which account for 94 per cent of Coal India's workforce, are revised every five years. The hike is due from July 2021. In 2017, CIL signed a wage agreement with worker unions proposing a 20 per cent hike in salaries for five years.
Coal India has a total workforce of 2.59 lakh. Out of this, around 15,000 are executive staff. Later in a statement, the firm said net profit for FY 2022-23 posted a massive 62 per cent growth at Rs 28,125 crore.
"This was despite provisioning Rs 8,153 crore in the accounts in 2022-23 towards wage revision of CIL's non-executive manpower," the company said.
This is the company's highest ever net profit, beating the previous best of Rs 17,464 crore in 2018-19. The net profit in Q4 shrunk "primarily due to increased provision towards the wages," it said. "PAT would have been the highest ever profit in any quarter had the provision not been made."
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The profits rose despite the company capping its coal prices for over the past five years amidst rising input costs, especially diesel and explosives and increased wage cost due to provisioning in the accounts.
Though e-auction sales at 16.40 million tonne were lower by 41 per cent in volume terms in Q4 compared to 27.65 million tonne of similar quarter in FY22, higher premiums under the e-window helped CIL in cranking up e-auction sales by Rs 690 crore, the statement said.
"The realization per tonne of coal was Rs 4,526 under auction segment in Q4 against Rs 2,434 in the same quarter of FY22. The jump was Rs 2,092 per tonne or 86 per cent."
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