REUTERS - State-run Coal India, the world's largest coal miner, posted a lower-than-expected quarterly net profit of 25.93 billion rupees ($517.3 million) as a price increase in February failed to boost profitability despite higher-than-expected sales.
Coal India, which produces nearly 80 percent of the coal in India, has been unable to meet growing power demand in Asia's third-largest economy from power and steel projects.
The company has said it may miss production targets this year because of delays in environmental clearances at some of its mines.
Coal accounts for more than half of India's power generation, and the country is likely to import 135 million tonnes of coal in the financial year that began April 1, spurred by demand that is forecast to grow 11 percent a year.
India holds about 10 percent of the world's coal reserves, but has struggled to provide enough fuel to its under-performing power sector because of policy challenges ranging from land acquisition to green clearances for mining and tariff subsidy programmes.
The Kolkata-based company said consolidated sales in July-September stood at 131.48 billion rupees.
A Reuters poll of brokerages had forecast a net profit of 28.5 billion rupees for the quarter on net sales of 130.9 billion.
The company, in which the government sold a 10-percent stake for $3.4 billion in the country's largest IPO ever last November, did not provide comparable numbers for the corresponding quarter last year as it was unlisted then.
However, on a half-yearly basis, its consolidated profit rose to 67.37 billion rupees in April-September as compared with 40.2 billion rupees a year earlier, it said.
The company has raised coal prices by 30 percent since February for some of its customers.
Coal India prices coal about two-thirds lower than global prices, in part because of comparatively low quality coal. Despite the price increase, its coal prices remain 30 to 60 percent lower than international rates.
Global thermal coal prices have been trading at about $120 a tonne, more than 20 percent higher than prices a year ago when prices were below $100 per tonne.
Coal India, which this month received government approval for acquiring unlisted coal assets overseas, has been on the lookout for coal mines abroad, but has faced stiff competition from global rivals as well as private sector Indian companies.
The miner, which is negotiating wage increases with its five recognised unions, is expected to effect the next round of price increases once these are finalised.
It is likely to make provision for 25 billion rupees this fiscal year for a likely wage increase, a senior finance official had said earlier.
Shares in Coal India, the country's fourth-most valuable firm at about $41 billion, closed unchanged at 326.10 rupees on Friday.
The stock, which closed at 326.10 rupees on Friday, has risen 3.6 percent in 2011, outperforming a nearly 16 percent decline in the main index. ($1 = 50.1 rupees)