The Hindu Business Line : Coal India likely to report Rs 6,000-cr net profit

FOR the first time since the nationalisation of the coal industry and the formation of Coal India Ltd (CIL), the public sector behemoth looks set to report a net profit of more than Rs 6,000 crore with all its seven coal-producing subsidiaries reporting net profit for fiscal 2005-06.

According to CIL officials, "this has been possible through overall improvement in the functioning of the companies at the mine level and also because of various steps initiated to bring in transparency of operations as well as in the tendering process."

For fiscal 2004-05 CIL reported a net profit of around Rs 4,200 crore. This year the net profit for the first nine months stood at Rs 5,200 crore and is likely to cross Rs 6,000 crore by the year end, officials maintained.

The coal producing subsidiaries of CIL are Northern Coalfields Ltd (NCL), South Eastern Coalfields Ltd (SECL), Western Coalfields Ltd (WCL), Mahanadi Coalfields Ltd (MCL), Eastern Coalfields Ltd (ECL), Bharat Coking Coal Ltd (BCCL) and Central Coalfields Ltd (CCL).

Of these ECL, BCCL and CCL had been incurring losses and were even referred to the Board for Industrial and Financial Reconstruction (BIFR). However, the increase in demand for coal, along with higher price realisation through e-auction has substantially boosted profits.

During April-November 2005, CIL has sold 10.21 million tonnes of coal through e-marketing. Average realisation above the notified price during this period was nearly 54.2 per cent, officials said.

As many as 17,403 bidders participated in the process, with 10,526 being successful. According to company officials, the total gain to CIL has been about Rs 565.36 crore.

Another 10 million tonnes of coal have been released through this mode to increase availability in the market and bring down prices, Ministry officials said.

The company is also seeking the Government's nod for disinvestments of 5 per cent Government equity and issuance of another 5 per cent fresh equity.

CIL currently has a paid-up capital of Rs 7,220.54 crore comprising Rs 904.18 crore of non-cumulative, 10 per cent redeemable preference share capital and Rs 6,316.36 crore of equity capital issued to the Government, including Rs 256.93 crore worth of equity shares issued to the Government towards the value of land acquired.

However, officials pointed out that despite good performance, labour issues have been troubling CIL with the officer cadre increasingly demoralised over alleged step-motherly treatment. "There is no clear promotion policy for the senior staff, nor a properly defined skill enhancement and training facility.

"Recently the wage settlement for the workmen has been signed unanimously by all the 15 workmen unions which has made them the highest earning labour force among all public sector undertakings but the officer cadre continues to be neglected as a result of which a strike notice has been served," officials said.