Kolkata: State-owned Coal India Ltd (CIL) on Friday said net profit in the quarter to June grew 64% over the same period last year to Rs. 4,143.92 crore, or Rs. 6.56 a share, thanks to an increase in prices.

Revenue rose 26.8% to Rs. 14,499.08 crore. Sales by volume grew 5.15% to 106.25 million tonnes (mt).

CIL fell 95 paise, or 0.25%, to Rs. 385.30 on BSE, while the benchmark Sensex declined 219.77 points, or 1.29%, to 16,839.63 points.

Coal production during the quarter at 96.3 mt was slightly lower than the company’s target of 98.66 mt. “We are hopeful that production will pick up once the rain abates and we will achieve our full-year target,” said chairman N.C. Jha.

CIL’s sales target for this fiscal year is 454 mt, 8.5% higher than in fiscal 2011.

There has been significant improvement in railway rake availability, according to CIL’s director finance A.K. Sinha, and in the quarter till June, 166 rakes were on average available every day. The company had said at the end of fiscal 2011 that sales and production suffered because of rake shortages.

CIL’s operating profit margin during the quarter grew by 841 basis points to 41.07% despite a 7.5% increase in costs, according to Sinha. This was largely due to the revision of coal prices earlier this year, he added.

The firm will begin negotiating wage revisions with employees on 21 August, said Jha. He expects to conclude negotiations within five-six months, whereas last time it took 13 months, the quickest in CIL’s history.

Asked if CIL was planning to raise coal prices again to absorb the higher wage cost, Jha said it will be decided only at the time of concluding negotiations with the trade unions.

However, CIL will start providing for the potential increase in wage costs from the next quarter. Profit growth in the quarter till September will, therefore, be lower than in the first quarter, Jha added.

Meanwhile, CIL announced its board had cleared a proposal to spend up to Rs. 4,200 crore to build 21-22 washeries, over and above the 20 already in the pipeline, on which the company will spend Rs. 2,800 crore.

In eight years, all these washeries will be commissioned and CIL will wash on its own 45-50% of the coal it mines. Washed coal fetches a significantly higher price.

During the April-June quarter, CIL sold 11.39 mt of coal through electronic auctions, 2.09 mt more than during the same period last year. Coal sold through electronic auctions fetches a better price.