CIL's income rose to Rs 28,909.3 crore, over Rs 26,633.89 crore from mining activities in the March quarter
World's largest coal miner, Coal India Ltd (CIL), is taking a relook at its mounting costs as maintaining an army of miners is taking at toll on its profitability.
Employee benefit hikes for its over 3 lakh miners pushed up the staff costs by 80% to Rs 16,653.86 crore during the quarter ended March 31, which pulled down Coal India's net profit by 52% to Rs 1,295 crore.
The public sector major is working towards bringing down its cost of production to a bare minimum by creating a roadmap in a bid to make its operations benchmarked against global miners, the newly-appointed CIL chairman and managing director Anil Kumar Jha said on Monday evening before earnings were released on Tuesday.
"A mine of 20 million tonne in Australia has 300-400 employees while in India it is over 1,000," Jha said, referring to difficulties in absorbing latest mining technologies.
"Further employee benefit expenses for the quarter/year-ended March 2018 also include Rs 7,384.37 crore towards increase in gratuity ceiling from Rs 10 lakh to Rs 20 lakh with effect from March 29 vide amendment in the Payment of Gratuity (Amendment) Act 2018," Coal India said in its notes to accounts.
Industry-wide National Coal Wage Agreement was finalised in October last year, though revised wages were due since July 2016, leading to high arrears.
"Employee benefit expenses for the quarter and year ended March 2018 include a provision of Rs 646.87 crore and Rs 899.14 crore, respectively towards pay revision of the executive employees. The National Wage Agreement for -10 for revision of wages of non-executive employees (due with effect from July 1, 2016) has been finalised on October 10, 2017," it said.
The surge in employee benefit costs has taken analysts by surprise, who, according to a Bloomberg estimates, were expecting net income of Rs 4,341 crore against Rs 1,295 crores earned.
The salary hike following the enactment of wage agreement was otherwise seen as covered by the hike in coal prices in January.
"Increased employee costs due to wage hikes have been offset by price hikes and evacuation facility charges, which are expected to add to revenues from 4QFY18" JM Financial had said earlier.
CIL's income increased to Rs 28,909.3 crore, over Rs 26,633.89 crore from mining activities.
...& ANALYSIS
- CIL's income rose to Rs 28,909.3 crore, over Rs 26,633.89 crore from mining activities in the March quarter
- But net profit plunged 52% as employee benefit hikes pushed up the staff costs by 80% to Rs 16,653.86 crore
- Further employee benefit expenses for the quarter/year-ended March 2018 also include Rs 7,384.37 crore towards increase in gratuity ceiling
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 "Coal India")
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