MUMBAI/NEW DELHI Coal India(COAL.NS), the world's largest coal miner by output, posted its second straight decline in quarterly profit, hurt by lower selling prices and higher wage and diesel costs.
The Kolkata-based company said net profit for its fiscal second quarter fell marginally to 30.5 billion rupees from 30.8 billion rupees a year earlier. Net sales rose 5.8 percent to a lower-than-expected 154.1 billion rupees.
Analysts, on average, had forecast profit of 35.2 billion rupees, according to Thomson Reuters Starmine data.
"The sponge iron industry is in the doldrums, construction industry and thus cement makers have been hit. This led to lower price realisation in e-auctions," Finance Director A. Chatterjee told Reuters.
Sponge iron producers and cement companies form the bulk of buyers at e-auctions, Chatterjee said. E-auction prices averaged 2,220 rupees a tonne during the quarter, down from 2,460 rupees a tonne a year earlier.
The company sells about 10 percent of its volume through e-auctions at near-spot rates, which have stayed soft in the last few months in line with international prices.
Coal India, which accounts for 80 percent of India's coal output, has missed production targets so far this year, resulting in costly imports. The miner produced a lower-than-targeted 452 million tonnes of coal in 2012/13.
Its growth has also been hobbled by a lack of modernisation and delayed approvals of its mining projects.
For the quarter ending September 30, the miner said it produced 97.6 million tonnes of coal, compared with 89.1 million tonnes a year ago. Shipments rose 7 percent to 109.1 million tonnes.
Employee expenses rose 3 percent to 69.7 billion rupees for the quarter, and wages for contractual staff jumped 28 percent to 13.9 billion rupees.
Coal India, which prices domestic coal at discounts of between 45 and 70 percent to international prices, raised prices for some categories in May, a move which it says will yield additional revenue of 25 billion rupees annually.
Shares in the company, worth more than $29 billion, have lost nearly a fifth of their value so far in 2013, underperforming a near 4 percent rise in the BSE Sensex. The stock closed 0.1 percent higher on Wednesday, ahead of the results announcement. (Reporting by Prashant Mehra and Krishna Das; editing by David Evans)