Company announces 8 per cent rise in profit in first quarter

Almost all the independent directors of Coal India Ltd. (CIL), on Monday, felt that adequate safeguards would need to be put in place before CIL undertakes imports to meet its commitment of supplying 80 per cent of the annual contracted quantity.

As a result, the fuel supply agreement (FSA) issue remained unresolved. Addressing a press conference here, Chairman S. Narsing Rao said, “it is still not in a signable form”.

It may be mentioned that the CIL’s parent ministry had told it to incorporate adequate force majeure clauses in the FSA to protect it from being saddled with imported coal which has no takers due to the unwillingness of power plants to receive the coal as well as the failure of the importing agencies to supply coal.

The need for importing coal arises out of CIL’s production constraints. The issue of price-pool for averaging out the impact of imported price of coal also raised doubts in the minds of the independent directors, it was learnt.

Meanwhile, the company announced a 7.9 per cent increase in profit for the first quarter ended June 30, 2012.

Mr. Rao said that sales had been boosted by the new pricing system based on gross calorific value as well as e-auctions, which fetched higher revenues.

Net sales, at Rs.16,500 crores was 13.8 per cent higher quarter-on-quarter. Post-tax profit, at Rs.4,469.3 crore, rose by 7.9 per cent. The bottom line took a Rs.1,200 crore hit on account of the implementation of the National Coal Wage Agreement-IX. The agreement is effective July 1, 2011.

Mr. Rao reacted sharply against the tendency to put CIL in the dock every time power plants faced fuel shortage.

He said that linkages were on the basis of 85 per cent plant load factor (PLF), and CIL singly could not be held responsible in the event of a shortfall on account of spurt in PLF.

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