By Siddesh Mayenkar and Prashant Mehra
MUMBAI (Reuters) - Coal India
The company expects however to gain in the near future from a price hike in end-May, and hopes to achieve production growth targets for the year, Chairman S. Narsing Rao said.
"We hope to achieve our target growth of 5.8 percent by end of year though asking growth now is 7 percent ... we are taking many steps (to meet production targets), wait and see," said Rao.
The state-owned miner said net profit for its fiscal first quarter fell to 37.31 billion rupees from 44.69 billion rupees a year earlier. Net sales were nearly flat at 164.72 billion rupees.
"Profit fell because of less e-auction realisation by 557 crores rupees (5.57 billion rupees), substantial increase in sale of FSA coal i.e. coal to power sector, increased cost of production owing to rise in diesel prices, increase in wages of contractual labourers," said Rao.
Analysts, on average, had forecast net profit of 42.40 billion rupees, according to Thomson Reuters Starmine data.
Coal India produces about 80 percent of India's total coal output, but growth has been stymied for years by delays in environmental and regulatory approvals for mining projects.
The Kolkata-based company said it produced 102.89 million tonnes of coal in the quarter, compared with 102.47 million tonnes a year earlier. Shipments rose 2.05 percent to 115.36 million tonnes, and missed the target. The miner produced 452 million tonnes of coal in 2012/13, below its target.
Employee expenses rose by 4.25 billion rupees in the quarter to June 2013 compared with the same period last year, the result of a wage increase the company signed with its 375,000 workers last year.
Coal India, which prices domestic coal at discounts of between 45 and 70 percent to international prices, had raised prices for some categories of coal in May, a move which will yield additional revenue of 25 billion rupees annually.
Coal India sells about 10 percent of its volumes through e-auctions at nearly-spot rates, which have softened in the last quarter in line with international prices.
Coal India is not contemplating any price hike now, finance director A. Chatterjee told Reuters. Last year, its main clients the power companies protested when prices were raised, forcing it to reverse the changes.
The Indian government plans to sell a five percent stake in the company, down from the 10 percent planned earlier, after reaching an agreement with major trade unions.
Rao did not comment on the planned share sale.
Shares in Coal India, valued by the market at more than $29 billion, have lost a quarter of their value so far in 2013, underperforming the nearly flat main stock index <.BSESN>, mainly over worries about its inability to increase production.
The stock closed 5.74 percent lower on Friday, ahead of the results announcement.
(Additional reporting by Sujoy Dhar in Kolkata; editing by Andrew Roche)
