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To: LoneClone who wrote (37567)	5/24/2009 12:20:17 PM
From: LoneClone	Read Replies (1) \| Respond to of 195121

CIL need to hike coal prices by at least 13% Sunday, 24 May 2009 steelguru.com ET Bureau reported that CIL may need to hike coal prices by at least 13% if it has to take up all its proposed expansion projects and retain its earlier profit trends in 2009-10. Indications are that the company will take a decision on hiking coal prices this year. Mr PS Bhattacharyya chairman of CIL said "According to rough estimates, we need an additional revenue generation of INR 5000 crore to make all our planned projects viable and post a healthy net profit during 2009-10." Mr Bhattacharyya did not provide any indication when prices would be raised or by how much it would be raised. All he said on the topic was "Unless coal prices are revised, CIL’s margins will be severely dented beginning 2009-10." Mr Bhattacharyya said "About 33 new projects that were otherwise viable before the salary hike, have now been rendered unviable since these projects had very high cost components. Now that outgo on account of salary has increased by about INR 4000 crore per year, we cannot take up these projects now." He said "The projects were expected to add 28.37 million tonne of additional production. We are yet to take stock of future projects in the pipeline. According to a rough estimate we need an additional revenue generation of INR 5000 crore to make the projects viable and post a healthy net profit." He further added that 2 of its loss making subsidiaries Bharat Coking Coal and Eastern Coalfields will be badly hit without a proportionate coal price hike. ECL has already decided to close a number of loss making mines and re-deploy the workforce to other operations. Estimates show that a 1% rise in coal prices on the present price levels results in additional revenue generation of about INR 380 crore. The two coupled together suggest that a 13% rise in prices may generate the much required additional INR 5000 crore. Events took a turn for the worse at CIL when it saw profits for 2008-09 virtually vanish on account of a hefty rise in wage bills. It registered a modest INR 96 crore PAT after paying INR 7,856 crore of arrears as a result of the recent salary hike for officials and employees. During the previous year CIL registered INR 5,243 crore PAT. Despite, a declining profit, CIL paid a INR 1,705 crore dividend to government. The impact of salary hike has been estimated at INR 4000 crore per year and this is also expected to dent profits in the current fiscal unless prices are increased. Additionally, about 33 projects have been rendered unviable as result of increased outgo on account of salaries and wage.