Coal India quarterly profit jumps surprise 64%

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Coal India Ltd, the world's biggest coal miner, has announced a better-than-expected 64 per cent jump in first-quarter net profit on the back of robust demand and price rises.

Net profit for the three months to the end of June climbed to 41.4 billion rupees ($912 million) from 25.3 billion rupees a year earlier on sales which rose 27 per cent to 145 billion rupees, the state-run miner said in a statement late on Friday.

The Kolkata-based company's profit for the quarter exceeded analysts' forecasts of 36 billion rupees.

"We have registered good profit levels in the first quarter," chairman N.C. Jha said.

But he warned profit growth would not be as high in the second quarter due to forthcoming wage negotiations with the company's 300,000 workers.

"We have to make some provisions for the wage hike so profit growth will be slower," he said. Last time, the workers received a 24 per cent pay rise.

Coal India raised $3.4 billion in November 2010 when it sold a 10 per cent stake in an initial public offering (IPO) that was hugely oversubscribed.

Shares of the company have jumped more than 20 percent this year in contrast to the main Bombay share index which has tumbled 18 per cent.

Coal India produces more than 80 per cent of India's coal at 471 mines across eight states.

It also holds the largest extractable coal reserves in the world with over 22 billion tonnes, ahead of rivals China Shenhua Energy and the world's largest private miner, Peabody Energy in the United States.

The company has accumulated a war chest of 60 billion rupees that it aims to use to buy mines in Indonesia, Australia and the United States.

Coal accounts for more than half of India's energy use and consumption is set to increase as the country's economic development accelerates in energy-intensive sectors such as steel and cement manufacturing.