CIL may see dip in profit by 45%

Government-owned Coal India Ltd (CIL) may see its profit dip by around 45% this fiscal. The navaratna company projected profit before tax (PBT) close to Rs 10,000 crore for 2008-09; but new liabilities, especially the National Coal Wage Agreement (NCWA)-VIII signed on January 24, 2009, can pull it down by Rs 4,500 crore.

The NCWA-VIII will entail a total outgo of Rs 6,200 crore this fiscal as it comes into effect retrospectively from July 1, 2006. The company?s personnel and industrial relation director R Mohan Das told FE that although CIL will continue to remain a profit-making company, and despite the Rs 1,700 crore already paid to its workers as interim relief, the NCWA-VIII will definitely have an impact on the balance sheet this year.

Earlier, CIL chairman Partha S Bhattacharyya said the company will end up 2008-09 with a gross profit of Rs 10,000 crore against Rs 9,576.22 crore posted in 2007-08. Das said a small increase in coal price could have offset the impact of the coal wage agreement to some extent, but the ministry is not willing to permit an increase now. It is to be noted here, that CIL had revised coal prices by 10% in December 2007 on the implementation of the previous round of the NCWA retrospectively.

?CIL may consider a price increase 2010-11 when the impact will be Rs 2,400 crore; but before that the only way to offset the impact is increasing production,? he said.

The NCWA, covering five lakh workmen of CIL and Singareni Collieries, made a 24% increase in the workers? emoluments as on June 30, 2006, with the minimum basic going up from Rs 5,550 per month to Rs 8,360 per month. While the minimum benefit on the lowest scale will be Rs 1,809.44 per month, the maximum will be Rs 4,473.74 per month. The annual increment in NSWA-VIII, will be 3% of the progressive basic, an official said.

CIL?s workers? basic goes up by 3% every year.

The NSWA-VII?s impact on the balance sheet was much lesser-at Rs 1,175 crore per annum although it covered 6 lakh workmen. According to some trade union representatives the wage agreement come so fast as mineworkers had threatened to strike work. A Joint Bipartite Committee for Coal Industry (JBCCI) with 17 management representatives and 16 trade union representatives works on the national coal wage agreements. The government approved formation of the JBCCI for NCWA-VIII in February 2007 and it was formed in May that year.

While the negotiations were on, the five trade unions-BMS, INTUC, AITUC, CITU and HMS-in December called a nationwide coal mines strike on January 5, 6 and 7. It was withdrawn when Prime Minister Manmohan Singh gave an assurance that the NCWA-VIII will be on the table before the 60th Republic Day.

A CIL official said that the country?s 30 power utilities were running with a coal stock of only two days at that time and a strike will have left the power utilities out of stock in no time.