Coal prices hiked by around Rs 110/tonne to rationalise prices: Coal India

According to him, the price hike of Rs 106-110 per tonne is an attempt to rationalize the prices.

FY17 employee cost was Rs 33,000 crore and FY18 employee cost is estimated at Rs 36,000 crore, an increase of about 10 percent, he further mentioned.

Speaking about offer-for-sale (OFS), he said right now we don’t have any communication from the government on OFS.

Below is the verbatim transcript of the interview.

Latha: On an annual basis the total revenue is about Rs 6,421 crore, if you can first begin by telling us what is the per tonne increase?

A: It will be about Rs 110.

Sonia: Why a two-step price increase though, in December 2017 there was Rs 50 per tonne evacuation charge as well, right?

A: Regarding the evacuation charges, I mean that Rs 50 a tonne, the very basic objective of charging that evacuation charge is not the increase in the total revenue to be earned by the company. That amount we are charging in order to adopt the state-of-the-art and environment friendly technologies for evacuation of our coal. It is essential for Coal India’s sustenance that we adopt the environment friendly technologies. So, right now we transport our coal through roads and un-environment friendly, because road transport is never good for the people and for the environment.

So we are trying to improve upon and we plan to have belt conveyors, then sliding within leasehold area of the mines and we are planning to setup a high rapid loading systems, silos etc. So this Rs 50 evacuation charges will be spend for creating environment friendly evacuation facilities. This Rs 110, about Rs 106 to 110 actually we have tried to rationalise the prices.

Anuj: So to cut a long story short these price hikes will straight away add to your EBITDA?

A: Naturally yes, any additional revenue that will add to EBITDA.

Sonia: Have you received any objections from your customers with regards to these price increases?

A: No, everything is fine. There was no hurdle from any corner. Rather consumers and market was expecting much before that Coal India will revise its prices.

Latha: So you are saying they were expecting it?

A: Because, if you look at the increase in Wholesale Price Index (WPI), Consumer Price Index (CPI) and if you consider the global prices even with these revised prices, rationalised prices we have given the heavy discount where in from 44 percent to 64 percent compared to the Indonesian coal so huge discounts has been given by the Coal India.

Anuj: Let us move on to the other issue, give us a sense of the employee cost and the total number of employees in FY17 and what would that number look like in FY18?

A: Last year our expenditure under cost to employee was Rs 33,000 crore. This year we have estimated it to be Rs 36,000 crore. There will be an increase of about 10 percent. We have 2,98,000 employees and every year average decrease is 12,000 employees.
So this year our number will be to 2,98,000 minus 12,000 about 2,86,000 employees will be there.

Sonia: the time does seem perfect for an offer for sale (OFS) now have you heard anything from the governments end?

A: Right now we don’t have such communication.

Latha: You have been paying good dividends in the past three years, can you maintain that dividend pay-out ratio?

A: We are a listed company, I mean there are certain SEBI guidelines. We cannot discuss this point at this point of time.