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Informist, Friday, Oct. 25, 2024

 

--Coal India Apr-Sept consol revenue INR 671.37 bln vs INR 687.60 bln yr ago

--Coal India Apr-Sept consol net profit INR 172.49 bln vs INR 185.77 bln

--Coal India to pay INR 15.75 per share interim dividend

--Coal India Jul-Sept consol revenue INR 306.73 bln vs INR 327.76 bln yr ago

--Coal India Jul-Sept consol net profit INR 62.89 bln vs INR 80.49 bln

--Analysts saw Coal India Jul-Sept consol net profit INR 72.47 bln

--Coal India Jul-Sept consol net profit INR 62.89 bln

 

By Avishek Rakshit

 

KOLKATA – Lower sales volume and falling income from e-auctions hit Coal India Ltd.'s financial performance hard in Jul-Sept even as the company tried to control the financial impact through cost control measures like strategic sourcing of raw materials and explosives, ongoing gradual reduction in manpower, increasing reliance on outsourcing, and others.

 

For Jul-Sept, the Maharatana company reported a 6.4% on-year decline in its consolidated revenue at INR 306.7 billion, while the profit attributed to the shareholders of the company tanked by 21.9% on-year to INR 62.9 billion. This is the first time in the last four quarters that Coal India reported a decline in its profits on an on-year basis. The Street had factored in lower sales volume and falling revenues from e-auctions while estimating the company's financial projections, but the company's results were far below what sector analysts were anticipating.

 

The average of the estimates from eight brokerages had pegged Coal India's profit attributed to the shareholders of the company at INR 72.5 billion on revenues of INR 313.7 billion. Instead of posting an anticipated profit growth of 6.6% on year, Coal India reported a decline.

 

The fall in revenue was primarily on account of a 3.5% on-year decline in its sales volumes. The world's largest coal miner sold 167.7 million tonnes of coal during the quarter as against 173.7 million tonnes in the year-ago period.

 

"Sales were hit as demand from the power sector was far below what was anticipated. Moreover, demand in the e-auctions normalised to a large extent which also led to lower revenue and profit," a Coal India official told Informist.

 

At a time when sales volume declined, the company's average price realisation per tonne of sales fell as well, which further aggravated the fall in revenues. Coal India's average price realisation per tonne of sales in Jul-Sept fell by 8.5% on year at INR 1,622.2, the company official said. In the year-ago period, the price realisation was nearly INR 1,773.0 per tonne of sales, and in Apr-Jun, it was a little over INR 1671.0. Some brokerages had anticipated a 2.4% on-year decline in average price realisations, and some had stated it to remain at the levels of the year-ago period.

 

"Our e-auction sales got hit hard and prices declined by nearly 13% (on year). We had offered more coal in the e-auctions but sales were lower (on-year) as there is enough coal available in the country," the company executive said.

 

Average prices per tonne of coal in the e-auctions in Jul-Sept fell sharply to INR 2,471 from INR 2,838 in the year-ago period. Coal India was able to sell 15.0 million tonne coal through the e-auctions in Jul-Sept compared with 15.8 million tonne in Jul-Sept of 2023-24 (Apr-Mar). Thus, Coal India's total revenue from e-auctions dipped sharply by 16.9% on year at INR 37.3 billion.

 

Sales at the e-auctions were one of the most important parameters for the company's financial performance, although the sales volume hardly ever exceeded 20% of the total sales volume in any quarter. It is because the cost of mining is the same for the coal sold through contractual agreements or at the e-auctions, but the latter is priced at a premium than notified prices of coal. Hence, Coal India’s income from e-auctions directly adds up to its pre-tax profit and is a key determinant of profitability.

 

Coal India's average price realisation from contractual sales declined as well by 5.1% on year at INR I,462.5. Together with sales volumes under contractual agreements falling by 4.2% on year, Coal India's revenue from this type of sales declined by 9.1% on year at INR 216.7 billion. Contractual sales account for a mammoth share of the revenue and volume.

 

Coal India's cost control measures led to the total expenses falling 1.4% on year at INR 241.6 billion. Employee benefit expenses--its largest cost overhead--declined 1.4% on-year to INR 114.8 billion, and cost of raw materials fell 11.1% on year to INR 22.9 billion.

 

During Apr-Sept, Coal India’s profit attributed to shareholders fell 7.2% on year to INR 172.5 billion, and consolidated sales declined 2.4% on year to INR 671.4 billion. The company’s board today approved its first interim dividend INR 15.75 per share on the face value of INR 10.

 

In a separate notice to bourses, Coal India said that it was shutting down its loss-making subsidiary CIL Solar Pvt. Ltd., which is engaged in the solar power business, but is yet to commence any operations. The closure is expected to be completed within a period of 8-10 months.

 

On Friday, shares of Coal India closed 3.4% down at INR 461.1 on the National Stock Exchange. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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