Coal India
Coal India, which produces almost 80 percent of the supply in Asia's third-largest economy, has struggled to raise output for years due to problems obtaining swift environmental and regulatory approval. It is under government pressure to expand supply to help ease a shortage that has slowed the rollout of much needed power plants.
The miner is targeting supply of 470 million tonnes of coal this fiscal year, its chairman said, about 9 percent higher from the 432.94 million tonnes in 2011/12.
"The offtake was strong and e-auction prices also fetched a bit higher than before. We are confident of meeting our target," S. Narsing Rao told reporters.
India's fourth-largest company by market value on Monday said April-June net profit rose 8 percent from a year earlier to 44.69 billion rupees. Net sales rose 13.8 percent to 165 billion rupees.
Analysts on average had forecast a net profit of 44.4 billion rupees on net sales of 166.5 billion rupees, according to a Reuters poll of brokerages.
The better-than-expected earnings may boost sentiment for the stock, which has already risen about 16 percent so far in 2012. Fifteen of the 19 analysts covering Coal India rate the stock a 'buy' or 'hold', Starmine data shows.
In the January-to-March period, the company reported its first quarterly decline since its listing in 2010, weighed down by a steep increase in wage bills.
SALES, PRICES BOOST Q1
The Kolkata-based company said on Monday it produced 102.5 million tonnes of coal in the fiscal first quarter, compared with 96.3 million tonnes a year earlier. Sh ipments r ose 6.3 percent to 113.04 million tonnes.
Margins also inched up on the back of better prices after the company changed in pricing system earlier this year.
Coal India moved to a new mechanism that links prices to gross calorific value (GCV) of the coal, although it still prices domestic coal 45 to 70 percent cheaper than international prices, in part to keep electricity tariffs low.
Employee expenses for the quarter jumped 26 percent to 61.3 billion rupees, the result of a wage increase pact the company signed with its more than 315,000 workers in January. Welfare expenses rose 37 percent to 4 billion rupees.
Shares in Coal India, valued at nearly $40 billion, closed 0.3 percent lower in a firm Mumbai market.
Sentiment for Coal India shares may be challenged because the company remains 90 percent controlled by the state.
Earlier this month, the miner agreed to supply a minimum of 80 percent of the coal needed for 48 new power projects, bowing to a condition set by the government. Coal India indicated it may need to import the fuel for the first time to fulfill the condition.
It has also been under intense pressure from Britain's The Children's Investment Fund Management (TCI) for giving in to government demands and reversing a price increase earlier this year. The fund last week filed a suit against the company and the Indian government in the Delhi High Court.
TCI argued in its petition that coal prices are completely deregulated and the government does not have legal authority to interfere with the discretion of Coal India.
"We will file our counter very soon," Rao told reporters.
