Coal India's profit declines due to wage provisions

Coal India, the world's largest coal miner, has reported a second consecutive quarterly decline in profits, attributing the drop to increased provisions for wage hikes. The company's consolidated net profit for the first quarter ending June 30 fell by almost 10%, amounting to 79.71 billion rupees ($962.4 million), as stated in an official exchange filing. This follows a 17.3% profit decrease in the previous quarter, interrupting a trend of over 45% profit growth in each quarter since the end of 2021.The company revealed that its provisions for wage hikes surged to 8 billion rupees from 3.24 billion rupees compared to the previous year, thereby impacting its profit margin. The deceleration in revenue growth also contributed to the challenging financial landscape, with revenue expanding by a mere 2.5% to 359.83 billion rupees, influenced by stabilized coal prices during the quarter.Despite heightened coal demand in India, the second-largest global consumer and importer of coal, the company encountered lower realization per tonne of coal at 3,740.84 rupees in the auction segment, reflecting a 13.8% drop from the prior year.Coal India managed to surpass its annual production target of 700 million tonnes in the fiscal year 2023, a feat not achieved since fiscal 2006, amid increased demand driven by power plants stocking up for heightened summer electricity consumption.Before the release of the results, the company's shares experienced a 1.2% decline. However, during the April-June quarter, the stock had risen by around 8%, slightly below the 8.2% rise observed in the Nifty energy index during the same period.