Rains dampen Coal India's growth, but bullish on road ahead

Coal India's production and growth has slowed down in the past two months. This, chairman NC Jha says is on the back of heavy rains. However, for the current year, he expects to produce 452 million tonne coal.

In February, the company hiked prices at an average rate of 12%. But this year, Jha says they don't need another price hike to maintain margins. "There are no talks of coal price hike for power companies this year. However, we may consider a price hike id employee costs increase," he told CNBC-TV18 in an exclusive interview. Below is the verbatim transcript of his interview with Sonia Shenoy and Latha Venkatesh of CNBC-TV18. Also watch the accompanying videos. Q: Have you seen any indication of the volume slowing down because of the monsoon season? A: Yes, for the month of June we have not been able to achieve the target. We have fallen short by about 2 million tonne in the month of June but the month of April and May was quite good. On the whole we have produced about 96.3 million tonne in the first quarter and have dispatched about 106 million tonne so there is about 10 million tonne of additional dispatch. We have enough of coal stock thus the volume growth is not a big worry. Q: What about pricing. We had one round of price rise for some end-users on February 26. There was an expectation that perhaps power producers will now have to bear the brunt of some higher coal prices. Is anything at all slated in 2011 in terms of higher coal prices from you for power producers? A: 2011 is quite big; we are only at the end of June 2011. At the moment there is no thinking of any price hike. As and when we conclude the wage negotiation with our workforce, trade unions we might think of but there is nothing to say at this moment. Also Read: Technical cooperation with Poland on coal, lignite Q: What kind of a wage burden are you expecting in the negotiations that are currently under way? For an investor in your stock what should he factor in by way of employees cost in this year and basically where the negotiations are heading? A: We have to constitute a joint bipartite committee on coal industry which we call JBCCI. We have not been able to constitute it till date. We are in the process of dialogue with different trade unions. Hopefully by next week we will be doing so because there is still some problem with one of the trade unions. Once we discuss and finalise that we will constitute the committee. After constitution of the committee we will have the first meeting. We have not yet had any meeting so far so once we have the meeting; we got the mood of the trade unions only then we will be able to guess as to what sort of increase they are expecting and what we can provide for. But going by the trend that we had last time I feel we will be quite comfortable with the previous price hike that we had in February 2011. There may not be a need for having a relook at the prices but if it goes beyond that then definitely we will have to have a look at the fresh pricing system. Q: You said that the volumes in June have been slightly slower because of the monsoons. Will that affect your FY12 volume off-take target? The last time you spoke with us you said 452 million tonne is what you are targeting in FY12 as off-take. Do you think you could achieve that? A: As the trend go I am quite hopeful that that will be achieved. As far as the production volume growth is concerned we have already produced 97.5% of our target, 2.5% of the total volume is not very significant in our production volume when we raise so much of coal. As far as the off-take is concerned, even today we have  around 59.5 million tonne of coal stock at our pithead. If we produce even little less which I don