State miner Coal India (CIL) Thursday posted an 18 percent drop in consolidated net profit at Rs.4,434.19 crore for the fourth quarter ended March, as compared to that of Rs.5,413.91 crore in the same quarter of fiscal 2013.
The world's largest miner ascribed the fall to a write-off caused by a dispute with state-run generator NTPC on the quality of coal supplied.
"On the basis of this settlement formula and pending final reconciliation/settlement of all the subsidiaries of CIL with NTPC Ltd, provision/write off of Rs.876.45 crore for such deemed lowering of grade as compared to the grade of coal supplied and billed has been considered in the accounts during the quarter," Coal India said in a filing to the BSE.
Total income from operations at Rs.19,997.98 crore rose marginally over Rs.19,904.57 crore in the same quarter of the previous fiscal.
Expenses for the quarter increased 8.5 percent at Rs.15,474.47.
For the full fiscal 2013-14, while total income from operations was flat at Rs.68,810.02 crore, consolidated net profit dropped to Rs.15,111.67 crore, from Rs.17,356.36 crore in 2012-13.
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In its filing, the company elaborated on the dispute with NTPC.
"With the introduction of Gross Calorific Value (GCV) system of grading of coal from Jan 1, 2012, supply of coal to NTPC (a major coal customer) was billed at declared grade of coal corresponding to the GCV range of the coal supplied," CIL said.
"With effect from October 2012, NTPC released payment based on GCV determined unilaterally at the receiving end, contrary to the provision of fuel supply agreement which stipulates that the GCV is to be determined at the loading end by joint collection, preparation, testing and analysis of the coal being supplied, and withheld the balance amount," it added.
To resolve the dispute, the government has advised "extrapolation of the result of the third party sampling/analysis during October-December, 2013 to the supplies during the past period from October 2012 up to September 2013."
Coal India stock closed Thursday at Rs.373.60 a share, 6.75 points, or 1.77 percent, lower than its previous close on the BSE.