Coal India Ltd (COAL.NS), the world's largest coal miner by output, posted its third straight decline in quarterly profit, on the back of softer prices at coal auctions and lower sales volumes during the period.
The state-run company said net profit for its fiscal third quarter ended December fell 11.4 percent on the year to 38.94 billion rupees. Net sales fell 2 percent to a lower-than-expected 169.28 billion rupees.
Analysts, on average, had forecast profit of 38.94 billion rupees, on net sales of 170.8 billion, according to Thomson Reuters Starmine data.
Profit was lower because of the fall in price realisations from e-auctions, Coal India Chairman S Narsing Rao told reporters at its headquarters in Kolkata. E-auction prices averaged 2,332 rupees a tonne during the quarter, down more than a fifth from 2,941 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 past few months, in line with international prices.
Coal India sells the rest of its output to domestic customers through long-term contracts, with prices at discounts of between 45 and 70 percent to international prices. It last raised these prices marginally for some categories in December.
The miner, which accounts for 80 percent of India's coal output, has missed production targets so far this year, resulting in costly imports. It 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.
In the quarter ending December 31, Coal India said it produced 118.7 million tonnes of coal, compared with 117.4 million tonnes a year ago. However, shipments fell 3 percent to 117.2 million tonnes.
Employee expenses rose 5 percent to 69.8 billion rupees for the quarter, and wages for contractual staff jumped 21 percent to 18.02 billion rupees.
Shares in the company, worth more than $27 billion, have lost about 7 percent of their value so far in 2014, compared to a 3 percent fall in the main stock index .BSESN. Ahead of the results, the stock closed nearly flat at 269.90 rupees on Wednesday, in a strong Mumbai market.