Coal India Ltd. warns of price hike to combat higher costs.
- ByStartupStory | November 25, 2021
World’s largest producer of fuel Coal India Ltd. announced that due to rising costs it will inevitably be forced to hike prices of supplies in long-term deals in order to remain profitable, according to a Bloomberg report. The state-run company’s Chairman, Pramod Agrawal said on a conference call that ,”The Coal price increase is something we have to bring all stakeholders on board. ” he added, “Everybody understands that we have reached a point where coal price increase has become inevitable”.
The company is faced with increasing production costs. The hike in diesel prices along with the increase in salaries of its employees that will be due retroactively from July has caught the company between hard places. The Kolkata-based miner company consumes about 1.3 billion litres of diesel annually, as said by the Finance director Samiran Dutta.
According to Samiran Dutta, profit from the quarter ended September missed expectations. This rise in production cost may eat into investor returns and may eventually decrease Coal India’s investment in mines and logistic infrastructure. The shares of the company are up 17% this year and despite climate change awareness it hasn’t dented investments.
Coal India accounts for 70% of the nation’s electricity generation. The hike in prices will impact the economy to some degree.
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