Coal India

Coal India did not post good numbers for Q3FY14. Its consolidated net profit fell 11% at Rs.3894 crore on a 3% decline in total income at Rs.19,111 crore.  EBITDA was also lower, down from Rs.4288 crore to Rs.4104 crore. EBITDA margin was at 24.2% v/s 24.8% The fall in bottomline was mainly on account of fall in realizations from e-auction. E-auction prices averaged Rs.2,332/tonne during the quarter, down more than a fifth from Rs.2,941/tonne (YoY). It sells some 10% of its production through e-auction route. Its offtake came in lower at 117.16 million tonne (mt) v/s 120.45 mt (YoY) and production was at 118.71 mt v/s 117.37 mt (YoY).  What also affected the performance employee expenses rose 5% while wages for contractual staff jumped 21%.

The company has also missed production targets so far this year, resulting in costly imports but this is nothing new as in FY13 too, it had produced a lower-than-targeted 452 million tonnes of coal. The company, which recently doled out a hefty dividend payout at the behest of the Govt suffers from lack of modernization and delays in approvals for its mining projects. To at least be able to meet its production target the company needs to concentrate on improving production, deploying funds to modernize instead of rescuing the Govt of its self-created fiscal woes. For FY14, it is a known fact that the company will once again miss its production and shipment guidance but one has to now only wait and watch to see to what extent it misses its targets.  Clearly, Coal India is a case of strangulation by the Govt.