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Coal India FY10 net up 300%, works at IPO

Coal India FY10 net up 300%, works at IPO
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First Published: Tue, Apr 06 2010. 11 00 PM IST
Updated: Tue, Apr 06 2010. 11 00 PM IST
Kolkata/New Delhi: State-run Coal India Ltd on Monday reported a four-fold jump in profits for 2009-10 compared with the previous fiscal year, thanks to increased output, better coal prices and reduced production costs.
The earnings will boost India’s largest coal miner’s efforts to attract international buyers when the Union government sells a 10% stake in the firm in an initial public offering (IPO) later this year.
On Monday, CIL reported a net profit of Rs8,312.40 crore for the year ended 31 March, against Rs2,078.70 crore for the previous fiscal, when its margins were hampered by a payment of Rs3,216.50 crore as arrear wages after a pay revision.
The company reported a revenue of Rs52,088 crore, a 13.74% increase over Rs45,797 crore generated in 2008-09. It will update the provisional numbers with audited earnings later.
Coal prices went up from Rs927 to Rs1,000 a tonne during the year, while the cost of production fell from Rs791 to Rs780 a tonne, said director, finance, A.K. Sinha.
The company also raised production by 7% to 431.27 million tonnes (mt) over 2008-09.
It has now set a production target of 462 mt for the current fiscal year.
“The performance of Coal India should be good news for the sector, particularly when considered (in the light) that the prices have been discounted compared with internationally traded coal,” said Dipesh Dipu, a coal mining expert.
The company plans to launch its IPO in July and list shares in August. The government is looking to dispose of 630 million shares, and CIL has been busy persuading international miners such as Rio Tinto Group and Peabody Energy Corp. to buy stakes, chairman Partha S. Bhattacharya said.
“We have already started communicating with key international miners,” Bhattacharya said. “In the past six months, I have made presentations in the US and Singapore.”
The company has also set aside Rs6,000 crore for acquisitions this year, and is evaluating 10 proposals from Peabody and other firms to buy overseas coal assets and development and operation of coal mines.
Due to problems in transporting coal from its mines, Coal India also plans to enter the power sector and set up projects with utilities such as Orissa Power Generation Corp., Chhattisgarh State Electricity Board, NTPC Ltd and Neyveli Lignite Corp. Ltd through its subsidiaries.
Its current stock of 62 mt can support power generation of around 12,000MW for a year, but the mined coal cannot be transported on account of transportation glitches such as limited availability of wagons.
“The (power) projects are under consideration. We will think of more such projects as evacuation (transportation) is increasingly becoming a problem,” Bhattacharyya said.
Dipu said this was a good idea as power generated from such projects could be competitively priced.
“With large cash pool, access to fuel and access to technical support from other government-owned entities, Coal India may be relatively better placed to enter the power generation sector,” he said.
The company also plans to reduce its workforce—one of India’s largest—from 398,368 to 300,000 by 2020. It retrenched 13,982 employees in the first 11 months of the last fiscal year.
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First Published: Tue, Apr 06 2010. 11 00 PM IST