Nagpur | July 18, 2017: Low offtake of coal, especially by the power sector, has left Western Coalfields Limited (WCL), one of the major PSUs operating in the region, in losses. Even as output was jacked up by the company, which is a subsidiary of Coal India Limited (CIL), demand for coal did not meet the production. At the same time, a wage hike too left its impact on the company's profitability.
WCL, which will be announcing its financial results soon, has booked a loss of Rs750 crore for the fiscal ending March 2016, said sources. After incurring operating losses from 2011-12 to 2013-14, the company saw a turn around in financial year 2015-16. Now, it's in losses again, said sources privy to the development.
Despite operational losses for three years till 2013-14, WCL could record financial profits. This was due to the interest income on reserves parked with banks. Last fiscal, there was a major fall in the interest income, which led to financial losses, say sources.
Operational losses or profits mean the difference between income purely from sales or any core activity, and expenditure incurred in the business. Despite operational loss, a company can still register profits if income from other sources, like interest, exceeds the expenditure.
A low demand from the power sector has been dogging the coal industry, which has left its impact on WCL too. The company, on the other hand, had stepped up its production and was left with surplus stock, said sources.
Last year, WCL mined 46 million tonnes of coal out of which 6 million tonnes was blocked due to dispute. The coal was from the mines where rates are on cost-plus basis. The same coal will be auctioned this year. This year as much as 4 million tonnes of surplus stock was cleared.
The company hopes that things will improve in the current fiscal. There has been a sudden rise in demand for coal in the first half of the current year. The dispatches have gone up by 24% according to year on year basis. WCL is also looking for mines in other states like Orissa, where the operational cost is less. Considering the geological conditions in Central India, the cost incurred in mining coal is higher here.
Unions are, on the other hand, concerned that the losses may lead to manpower cuts. Joint Secretary of Koyla Shramik Sabha Deepak Chaudhary said the management should not resort to manpower reduction in order to prevent losses. He said the company needs to change its policy and restrict capital expenditure. The company had dipped into its reserves to open 18 new mines.
(Source: http://timesofindia.indiatimes.com/)