Coal India signs pact with worker unions for salary hike
New Delhi: Coal India Ltd signed an agreement with workers’ unions to increase salaries of its non-executive staff after negotiations extending for months ended.
The state-run miner will incur an average annual cost of Rs56.67 billion ($868 million) because of the rise, it said in a stock exchange filing on Tuesday. The increase will be effective for five years starting retroactively from July 2016 and will apply to its 298,000 workers, the company said.
The salary hike puts further pressure on the company’s earnings already hurt by degradation of coal quality at several mines. A revival in demand for coal seen over the past two months must sustain for longer for the company to seek higher prices from customers to offset the additional costs, said Rupesh Sankhe, an analyst at Reliance Securities Ltd.
Coal India in August reached a verbal agreement with workers’ unions to increase gross salaries by 20%, according to the union representatives.
The company’s earnings have dropped year-on-year in the past five consecutive quarters. Provisions for a salary increase have been responsible for the declines on the last four occasions, according to the company filings.
Coal India earmarked Rs28 billion for non-executive salary increases during the year that started in July 2016. Salaries of executive employees were to be revised from the start of the current calendar year.
Coal India shares rose 1.5% to Rs285.65 on Tuesday. Its shares have declined almost 5% this year, compared with a 20% gain in the benchmark S&P BSE Sensex. Bloomberg
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