Inflationary pressure and rising international prices might compel Coal India Ltd to increase prices during the early half of the next financial year."We are suffering from huge inflationary pressure and a wage revision would (also) happen with effect from July 1. The volume of production is also not increasing because of environmental roadblocks, so prices need to be raised. It will be in such a way as to cover the inflationary pressure," said Partha Bhattacharyya, chairman.
According to sources, the inflationary pressure on the company is 4-4.5 per cent, much less than the overall inflation rate.
If the state-run coal major, the world's largest in the sector, goes for a price rise, it would be the fifth after coal prices were completely deregulated in January 2000. The Kolkata-based company raised prices in February 2001, June 2004, December 2007 and October 2009.
"CIL moved away from the normal cost-based coal pricing during the administered regime in 1996, and continued with partial deregulation till 2000. Even after that, we had not done it with consulting the ministry," said a top company official. "Globally, coal prices have increased globally by around 40 per cent."
"Over the years, we had gone for only responsible increase in prices. Once the company shifts to washed coal, with better quality, the rates will naturally rise. However, for coking coal, the rise in prices will depend on international prices only," Bhattacharyya said. Currently, international prices are $130-140 per tonne.
Analysts seemed sceptical. "I don't think the rise will be enough for the company, as the overall inflation figures are much higher. Even if they increase prices by 4-4.5 per cent, they will be selling coal at much less than international prices. However, power companies will suffer a bit and their cost of production may increase by about five per cent," said Ravindra Deshpande, an analyst from Elara Capital.
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