State-run Coal India Ltd missed Street estimates with the net profit for the fourth quarter declining primarily because of increased provisions towards wages.
Coal India reported a consolidated net profit of Rs 5,527.62 crore in the March quarter, down 17.7 percent from a year ago. Consolidated revenue for the quarter stood at Rs 35,161.44 crore, up 17.3 percent year on year. The Bloomberg poll estimated a net profit of Rs 7,752 crore while revenue was expected at Rs 35,270 crore.
The company recommended a final dividend of Rs 4 per share. Earlier in two tranches a total dividend of Rs 20.25 per share was already paid out.
CIL's total expenses in the fourth quarter increased to Rs 32,791 crore from Rs 25,140.01 crore in the corresponding quarter of the previous fiscal.
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Employee benefit expenses surged 60 percent YoY to Rs 16,983 crore compared to Rs 12,951 crore of Bloomberg estimates. Contractual expenses jumped 24 percent from a year ago to Rs 7,040 crore from Rs 5,626 crore Bloomberg analysts estimates. Finance cost advanced 61 percent YoY to Rs 195 crore versus Rs 54.96 crore Bloomberg analysts expectations.
In January, the coal miner reached an agreement to propose a new wage agreement for its non-executive employees, which is expected to increase the annual wage bill to around Rs 46,000 crore, a likely rise of approximately Rs 6,000 crore.
If the provision had not been made, the net profit would have been the highest profit ever recorded in any quarter. Despite capping its coal prices for over five years and facing rising input costs such as diesel and explosives, as well as increased wage costs due to provisioning in the accounts, CIL managed to boost its profits significantly, the company said in a release.
For FY23, the firm reported a net profit of Rs 28,125 crore, up 62 percent compared to Rs 17,378 crore last year. The boost in net profit was despite provisioning Rs 8,153 crore towards wage revision of Coal India's non-executive manpower. The company said higher volume sales and increased premiums in e-auction bolstered the company’s profitability. Revenue for the year stood at Rs 1.27 lakh crore, up 27 percent YoY.
Despite a 41 percent decrease in e-auction sales volume in Q4 compared to the same quarter in FY’22, Coal India was able to increase its e-auction sales revenue by Rs 690 Crores thanks to higher premiums under the e-window. The average realization per tonne of coal was Rs. 4,526 under the auction segment in Q4, which is a significant increase from Rs 2,434 in the same quarter of FY’22. The increase was Rs 2,092 per tonne, or 86 percent.
Additionally, higher volume sales by 17.34 MTs and better average realization under FSA resulted in a net impact of around Rs 3,879 Crores in Q4. FSA sales increased to 167.45 MTs in Q4 FY’23 compared to 150.11 MTs in the preceding fiscal’s Q4, with a realization per tonne of coal under FSA category of Rs. 1,550, an increase of 5 percent, compared to Rs 1,470 per tonne in Q4 FY’22. For FY23, the realization per tonne of coal under e-auction was Rs 4,841, which is a significant increase from Rs 1,879 per tonne in FY’22.
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