Feb. 14 (Bloomberg) -- Coal India Ltd., the world’s largest producer of the fuel, posted a 54 percent increase in third- quarter profit, beating analysts’ estimates, after increasing prices and production.
Net income climbed to 40.4 billion rupees ($821 million), or 6.39 rupees a share, in the three months ended Dec. 31 from 26.3 billion rupees, or 4.16 rupees, a year earlier, Coal India said in a stock exchange filing yesterday. The median estimate of 28 analysts surveyed by Bloomberg was a profit of 36.4 billion rupees. Sales rose 21 percent to 153.5 billion rupees.
The company produces more than 80 percent of the country’s coal and plans to boost output to meet demand from power plants and steel mills in Asia’s second-fastest growing major economy. Coal India, based in Kolkata, raised prices in February 2011 and said it expects to add 62 billion rupees in revenue this financial year.
“Coal prices bumping up by around 21 percent have certainly had a hand in a result that’s surprised the market,” said Chetan Kapoor, a Mumbai-based analyst with IDBI Capital Market Services.
Coal India shares rose 1.4 percent to 336.60 rupees at the close in Mumbai, the highest level since Jan. 27. The stock, which was sold at 245 rupees apiece in October 2010 in the country’s biggest initial public offering, has gained 12 percent this year, compared with a 15 percent increase in the benchmark Sensitive Index.
The state-owned company agreed to raise gross wages by 25 percent and basic salaries by 4 percent for non-executive workers with effect from July 2011, which may cost it about 65 billion rupees annually. The government has said it would ask Coal India not to raise prices to cover the wage increase agreed in January.
A provision for the wage increase has been considered in the quarter and the final impact of the accord will be accounted for in the fourth quarter, Coal India said.
Production was 114.6 million metric tons compared with 113.8 million tons a year earlier, according to the filing. Output in the first nine months of the year dropped to 291.2 million tons from 299.5 million tons.
The development of new mines has been hindered by heavy rains and delays in acquiring land and getting environmental approvals.
India’s coal demand is expected to climb 41 percent to 981 million tons in the next five years, according to estimates by the Planning Commission. Output may rise 28 percent to 715 million tons in this period.
The nation plans to add 100,000 megawatts of electricity generation capacity during the period, more than half of which will use coal, according to the power ministry.
--With assistance from Kartikay Mehrotra in New Delhi. Editors: John Chacko, Aaron Sheldrick
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