A sharp decline in employee strength eligible for wage revision is likely to augur well for the country’s largest miner, Coal India Ltd (CIL). This, as the company expects the financial impact of the current National Coal Wage Agreement (NCWA)– XI will be “less intense” as compared to the previous one (NCWA – X).

The estimated average annual impact of the previous agreement, executed in 2016, is around ₹5,600 crore over a five-year period. The average annual impact is likely to be lesser under the current negotiation, a senior company official told BusinessLine .

Rise in remuneration

As per information available in CIL’s latest annual report (2021), median remuneration of all the employees increased by nearly 11 per cent and the average remuneration of all employees increased by around 20 per cent in FY21 compared to FY20. The average remuneration of KMPs (Key Managerial Personnel), too, increased by around 22 per cent.

It is to be noted that employee benefit expenses, which includes salary, wages and allowances, contributions to provident fund, pension and gratuity, overtime payments, leave encashment, attendance bonus, productivity and performance-linked bonus, and other incentives, constitute the largest component (nearly 51 per cent) of the total cost.

Also see: CIL’s dues from gencos for Apr-Oct fall 43%

As of July 1, 2021, the date from which the wage revision is effective, employee reduction was a little over 70,000 (to around 2.47 lakh) compared to the previous wage revision in 2016.

During the previous wage revision (NCWA-X), a major component of around ₹7,400 crore was on account of the gratuity payment doubling to ₹20 lakh from ₹10 lakh. The company expects this portion to be lower this time.

Reduced impact

The steady fall in headcount is another factor in blunting the financial impact as the net reduction of employees is to the tune of 13,000 to 14,000 per annum. The fall is likely to increase further due to natural attrition in the ensuing years making the company leaner, which would mean reduced labour cost.

According to Samiran Dutta, Director (Finance), CIL, the company has made an adhoc provision of around ₹300 crore during the second quarter of this fiscal towards possible impact of wage revision.

“Unless there is some headway into the negotiations, which are in very nascent stage, it is very difficult to understand the impact, or going forward how much we will be finally taking. This (provision of ₹300 crore) is in the backdrop that almost 75,000 PAX personnel have already gone down from the last NCWA. Going by other organisations where the trend is taking place, the DA increase is also less. So the impacts are no way similar to what had been in earlier cases,” Dutta said in an earnings conference call recently.

Benefit expenses down

The net reduction in manpower by 13,429 employees in FY21 helped bring down employee benefit expenses by nearly two per cent to ₹38,698 crore as against ₹39,404 crore in the year-ago period.

It is to be noted that CIL’s wage negotiation is still in its nascent stages as only two rounds of talks have been held so far. However, the company hopes to be able to wrap up the agreement at the earliest.

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