(Bloomberg) -- Coal India Ltd. has raised some prices of the fuel used to fire power plants for the first time in about a year-and-a-half, as the world's biggest coal producer shores up efforts to pay for higher salaries. Shares jumped.
Higher prices will boost the company's revenue by about 19.56 billion rupees ($308 million) in the financial year ending March 31 and annual revenue by 64.21 billion rupees, it said in an exchange filing. The Kolkata-based state miner has raised prices of some lower grades of the fuel, while reducing those for some higher grades with effect from Jan. 9, the company's marketing director, S.N. Prasad, said by phone.
“We have reduced prices of higher grades to compete with imports in line with the government's vision to reduce imports,” Prasad said. “The net addition in revenue will help us cover the salary increases and support future capital investments.”
This is the first increase in thermal coal prices by the company since May 2016. It more than covers the cost of the higher salaries the company agreed to pay its non-executive workers retroactively from July 2016. The salary increase will cost Coal India an average 56.67 billion rupees a year, it said in October.
Coal India rose 6.1 percent to 305.10 rupees as of 12:33 p.m. in Mumbai, its biggest intraday increase since November 2016. The benchmark S&P BSE Sensex was 0.2 percent higher.
Tariff Increase
Thermal coal accounts for about 90 percent of Coal India's production. Coal India's shipments in December rose to the highest for the month in data going back to 2013, as power plants, its biggest customers, bought more to replenish their depleted inventories. Tuesday's price increase is estimated to raise power tariffs by 0.07 rupees per kilowatt hour, Prasad said.
“The demand for coal is robust and there couldn't have been a better time for this price increase,” said Goutam Chakraborty, an analyst at Emkay Global Financial Services.
To contact the reporters on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net, Saket Sundria in Mumbai at ssundria@bloomberg.net.
To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Alpana Sarma, Abhay Singh
©2018 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
