Coal India net profit up 42% : Statistics and news

Net profit is seen up 42% at Rs 3734 crore versus Rs 2626 crore.

-Dispatches may increase 5% QoQ

-realizations to increase 6.2%QoQ

EBITDA margin is seen at 33% vs 27%.

· Co increased coal prices of Grade A & Grade B coal by 30% on Feb 27, 2011

· Price increase is partly to offset cost increases (~10% YoY) given increased staff costs (Dearness allowance increased by 50%) and other costs.

· Employees Wages and Benefits in FY11Q3 at Rs.4500 cr, should come in much higher

· Global coal prices have increased 20%+ since 3QFY11, and could lead to improved realizations for e-auctions.

· Have 70 million tonne of coal stocks that we had at the end of previous fiscal.

· 70 million tonne of coal stock translates to nearly 1/6th of our production merely 2 months production which is undesirable.

· There is an issue of movement of coal from the pithead to the consuming centers.

· Have been able to liquidate 4.5 million tonne of coal from stocks recently

Production:

· Coal India reported flat production of 431mt for FY11(unchanged YoY)

· Down 6.5% from its target driven by project delays and infrastructure constraints.

· Production in FY11 was estimated at approx 440m tons

· Raised selling prices to selective customers in Q4 FY11 to offset lower production.

· The new pricing mechanism would offer more exposure to the spot coal market

· Expect spot-based sales volumes to rise to 23% in FY12 from 16% in FY11.

· Production target for FY12 at 454mt

Further Price Hike on cards:

· Co may raise price of coal from July 1, 2011

· To increase prices to offset wage hike

· To decide on price hike by end of June

· Co to decide on another price hike post wage increase which may Increase wages by 30% In FY12

· To accommodate the proposed proposed mining bill

· Total Wage Bill Increase At 32% In FY11

E-Auctions

Coal India fuming at the Planning Commission's move of curbing down the amount of coal offered for e-auctioning:

· Feels e-auctions of coal should continue as e-auction has approval of the Supreme Court.

· States that the PSU will continue its 10% e-auction unless there is a new directive.

· 81% premium in e-auction comes over fuel supply agreements (FSA) and it will facilitate clearance of huge inventories.

· Any change in the e-auction policy will call for changes in the new coal distribution policy.

· Planning Commission had said that 10% of coal, which is e-auctioned by Coal India, should be cut down.

· The commission feels that CIL should adopt pool pricing for thermal coal and should also plan for import of coal.

· E-auction accounts for 11-12% of CIL's volumes and CIL's FY12E earnings could be hit 26% if discontinued

· 80% of the offered coal to e-auction goes by road and only 20% goes by rail.

· Power sector is demanding some coal from the e-auction.

· Ended up last year with 70 million tonne of coal stock.

· The last fiscal had offered to the power sector something around 335 million tonne of coal.

· But what reached them or what they could lift was only 304 million tonne.

· Feel that the e-auction should continue because this provides for only 10% of our total produce to those needy consumers who have not been getting linkages

· Providing linkages to the non-coal sector consumers was stopped since 2001.

· But by and large the entire power sector has been untouched from an increase in prices so far.

· Feels the infrastructure in the Indian Railways needs to be increased.

· The target for volume off take is 454 million tonne for FY12 and 11% of that would go for e-auction

· Have earmarked 347 million tonne for the power sector.

· There is absolutely no chance of this 50 million tonne being sold at fuel supply agreement (FSA) prices

Logistics Problem

· Indian Railways have increased the availability of rakes.

· In April 2010 the average rakes availability was 158 per day and this year April it has been 180 per day, which is about 22 rakes per day availability increase.

· Hoping this trend continues as it will help in liquidating stock

Sources