Coal India Ltd’s (CIL’s) wage bill as a percentage of overall costs is set to decline sharply within six years as the miner steps up its mechanization programme and as employees retire. As the chart shows, on a consolidated basis, CIL’s employee costs form a good chunk of overall operating costs. After employee costs as a percentage of total operating costs touched a high of 61% for fiscal year 2012, the measure declined to 52% for FY16.
Needless to say, some relief on this front will boost CIL’s profitability to that extent. However, for this fiscal year, analysts expect employee costs to increase considerably on account of the anticipated wage hikes. Depreciation and a few other expenses have been excluded from operating costs for this study.