It is also talking to an Australian company to increase the production from some of its underground mines to 5 million tonne a year, the largest in India. To do this, it will resort to off-balancesheet financing, since each 5m tonne mine would otherwise need an investment of $100 million.
ECL's chairman and managing director, Deepak Chakravarti, said capital expenditure is projected at Rs 393 crore in 07-08. "Now our investment is going to increase as we will buy three continuous miners, among other things," he said. It invested Rs 160 crore in the current year, and Rs 120 crore last year.
ECL will end this year with a net profit of Rs 100 crore on turnover of Rs 4,480 crore, against a profit of Rs 364 crore on a turnover of Rs 4,376 crore during 2005-06, the year it made its first profit since its birth in 1975. Chakravarti said he expects the profit to move up again, to Rs 350 crore, in 2007-08.
Finance director AK Sinha said that, among other things, the salary bill shrank by Rs 97 crore because of reduction of headcount but higher dearness allowance payments (Rs 155 crore) resulted in a net increase of Rs 58 crore. He said ECL's fixed costs account for 80-85% of total costs, which increase by Rs 155-160 crore a year.
ECL had also cut down on production volumes, when main buyer NTPC Ltd went back on a purchase commitment. This led to a loss of Rs 82 crore, while increase in e-booking fetched a gain of Rs 103 crore, leaving a net gain of Rs 21 crore.
The company, which sits on coal reserves of nearly 44 billion tonne across West Bengal and Jharkhand, expects to end the current financial year with production of 30.50 million tonne.
In 2007-08, it will be aiming for a production of 33.41m tonne, with 10.23m tonne coming from underground mines and 23.18m tonne from opencast mines.