The profit of Coal India Limited (CIL) could dip by the end of this fiscal owing to the National Coal Wage Agreement VIII (NCWA VIII), said CIL chairman Partha S Bhattacharya.
CIL felt the dip in profits could be balanced through increased production as increasing prices was not a solution.
Bhattacharya said, “CIL will increase prices at some point of time, but has to assess the impact of factors like NCWA-VII- the aim would be to keep coal end-users globally competitive and at the same time meet CIL's profit targets”. The expansion plans and fund requirement of CIL for offshore ventures had to be factored in and assessed before any price adjustments too.
CIL coal was almost 50-60 percent cheaper compared to international coal, claimed Bhattarcharya.CIL could consider a price increase in 2010-11 and would work to increase production, Bhattarcharya said.
CIL posted a profit before tax (provisional) of Rs 7,666.72 crore during April-December, 2008, higher by 60 per cent compared to the same period in the previous fiscal. NCWA VIII, finalized only last month, revised salaries of around 4.33 lakh workmen of CIL and its eight subsidiaries as on July 1, 2006. Bhattacharya said, “The impact of this wage revision agreement for the last 33 months starting from July 1, 2006, from when the agreement will come into force will be to the tune of Rs 5200 crore, which is without factoring in the officer's pay revision which also have to be factored in this year's account.”
Profit before tax (PBT) could be hit by around Rs 5000 crore as against Rs 8738 crore reported last financial year, he added. CIL had projected profit before tax (PBT) of close to Rs 10,000 crore for 2008-09. NCWA VIII signed on January 24, 2009, can pull it down. Annual financial impact on CIL of the wage agreement would be to the tune of Rs 2400 crore for the period subsequent to signing of the agreement.
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The impact of the previous wage agreement NCWA-VII was Rs 1175 crore for 6 lakh workmen. CIL revised coal prices by 10 per cent in December 2007 on the implementation of the previous round of the NCWA retrospectively.
CIL had invited Expression of Interest (EoIs) for seven new UG blocks and 17 bidders had shown interest and nine shortlisted. Tenders were due by March-end. NCWA-VIII had features like minimum guaranteed benefit which would be 24 per cent of total emoluments as on June 30, 2006, when NCWA VII came to an end. NCWA VIII, covering five lakh workmen of CIL and Singareni Collieries, promised minimum guaranteed benefit of 24 per cent increase of workers’ total emoluments as on June 30, 2006, with the minimum basic going up from Rs 5,550 per month to Rs 8,360 per month.
Minimum benefit on the lowest scale will be Rs 1,809.44 per month and maximum Rs 4,473.74 per month. Annual increment in NSWA-VIII would be 3 per cent of the progressive basic.