Coal India Q3 net falls over 11% to Rs3,894 crore

State-run Coal India Ltd (CIL) has reported an 11.4 per cent decline in its third quarter net profit to Rs3,894 crore and a 2 per cent fall in net sales to Rs16,928 crore on the back of a 2 per cent decline in net sales during the October-December 2013-14 quarter.

CIL, the world's largest coal miner by output, attributed the third straight decline in quarterly profit to softer prices at coal auctions and lower sales volumes during the period.

The state-run company said net profit for its fiscal third quarter ended 31 December 2013 fell 11.4 per cent year-on-year to Rs3,894 crore. Net sales fell 2 per cent to Rs16,928 crore.

Coal prices at the e-auction averaged Rs2,332 a tonne during the quarter, down more than a fifth from Rs2,941 a tonne a year earlier.

CIL sells about 10 per cent of its coal production through e-auctions at near-spot rates, which have remained soft in the past few months.

The rest of its production is sold to domestic customers through long-term contracts, with prices at discounts of between 45 and 70 per cent to international prices.

Coal India raised these prices marginally for some categories in December.

The company, which accounts for 80 per cent of India's coal output, has missed production targets so far this year, resulting in production of a lower-than-targeted 452 million tonnes of coal in 2012-13.

CIL has also been handicapped by a lack of modernisation and delayed approvals of its mining projects.

However, Coal India produced 118.7 million tonnes of coal during the quarter ended 31 December, compared with 117.4 million tonnes a year ago. Shipments fell 3 per cent to 117.2 million tonnes.

The company said employee costs have increased by about 5 per cent to Rs6,980 crore during the quarter while wages for contractual staff jumped 21 per cent to Rs1,802 crore.

Shares in the company have lost about 7 per cent so far in 2014, compared to a 3 per cent fall in the main stock index, the BSE Sensex.