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Dragged down by lower average realisation and an inflationary pressure on fuel and wage costs, Coal India Ltd (CIL) posted 16.5 per cent drop in net profit to Rs 3,731 crore for the first quarter ended June 30, 2013 as against the same period last year.
“Since most of our incremental production is committed towards the power companies, our profit margin going forward will be under pressure,” its Chairman S. Narsing Rao said here on Saturday.
Power companies are offered coal at 40 per cent cheaper rates when compared to unregulated sectors such as cement.
“The more coal we sell to power sector, our realisation will be that much lower,” he added.
Cost of production increased to Rs 758 crore due to increase in diesel prices, contractual expenses and salary increments, which had a bearing on profits.
“This is the first quarter where we felt the full impact of diesel prices hike, which increased by almost Rs 15 a litre (for bulk purchasers). Due to this our fuel cost went up by Rs 143 crore,” he said.
According to him, coal offtake was up by 2.1 per cent to 115.364 mt during the April-June quarter.
The company is confident to shore up profits by stepping up volume sales during the rest of the year.
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