Staff sops to hit CIL profits

The largesse announced by new Coal Minister Mamata Banerjee for employees of Coal India Limited would put additional burden on the public sector undertaking.

The company's cost on wages and personnel already accounts for about 35 per cent of its total expense.

The move to give additional 15 per cent interim relief to over 500,000 employees of CIL will certainly put pressure on the company's profits. It registered a profit of Rs 1,754 crore for the financial year ended March 2002.

While the measures announced by Banerjee is good news for employees of Coal India Ltd and its subsidiaries, it also means the 64 mines belonging to Eastern Coalfield Ltd will remain open despite the fact that the company has reported a net loss before tax of Rs 277 crore in 2001-02.

The proposal to keep the mines open will further increase CIL's woes, which already carries the burden of a combined loss of Rs 1,187 crore incurred by its sick subsidiaries. Neither CIL officials nor officials at the coal ministry were available for comments.

The decision to keep the defunct mines open comes despite the fact that on October 22, 2000 the ECL board had taken the decision to close 64 mines and retrench more than 71,000 workers following an ICICI Bank report.

The decisions will now have to be rolled back with Banerjee putting a ban on further retrenchment as well.

Explaining the rationale for the decision to give an interim relief, officials in the coal department said employees had not got interim relief for the past two-and-a-half years.

Banerjee on Monday had said she would also move the labour ministry, requesting it to take up the matter with the steel ministry so that coal miners under Tata Steel and IISCO also get the same interim relief.

In a bid to restrict the supply of imported coal, Banerjee said she would urge Finance Minister Jaswant Singh to increase the Customs duty.

The finance ministry had recently reduced Customs duty on imported coal from 25 per cent to 15 per cent.

Trade unions in coal sector have also demanded the restoration of Customs duty on imported coal to the pre-1991 level of 85 per cent on ground that lower customs duty will adversely impact domestic companies.

Analysts however said the move to lower import duty could provide an impetus to local producers to improve the quality of coal.