(Bloomberg) — Coal India Ltd., one of the world’s top fuel producers, reported a 17% drop in profit after doubling provisions to increase staff wages.
Net income at the state-run miner fell to 55.33 billion rupees ($676 million) in the three months to March from 66.93 billion rupees in the same period a year ago, according to a filing. exchange on Sunday. This compares to an average of 77.5 billion rupees according to analyst estimates compiled by Bloomberg. According to the earnings report, the company made provision of Rs 58.7 billion for higher salaries of non-executive staff in the quarter compared to Rs 4.8 billion a year earlier.
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The Kolkata-based miner reported a jump in other key operating parameters, including shipping volume and average price earned per ton of sales. “EAT would be the highest ever in any quarter without provisioning,” Coal India said in a separate press release. The company said its full-year profit through March rose to a record.
Coal is used to generate about three-quarters of India’s electricity, and soaring consumption has seen the supplier ramp up production and sales in recent months. Peak electricity demand hit a record in April, raising fears of a repeat of last summer’s disruption, when soaring industrial and residential energy consumption overwhelmed supply.
The supply shortfall boosts coal miners’ income, as it can cause customers to pay higher premiums in open market auctions to secure non-contractual supply.
Coal India says it has plenty of stock to meet summer demand, although limited rail capacity continues to challenge some manufacturers in reaching distant consumers. Temperatures are also forecast to rise sharply in some parts of the country in the coming weeks, putting further pressure on supplies.
Manufacturer’s total costs rose 30% in the quarter, due to wage increase terms. The mining company reached an agreement with workers unions in January to increase the base pay for non-executive employees.
—With support from Debjit Chakraborty.