Coal India spurts as 25% wage hike within expectation

Coal India jumped 5.50% to Rs 343.40 at 13:56 IST on BSE on reports the company has agreed in-principle to increase the wages of its three lakh-odd mine workers by 25%, as against a 100% hike that the unions had demanded last year.

Meanwhile, the BSE Sensex was up 203.43 points, or 1.27%, to 16,240.94.

On BSE, 9.32 lakh shares were traded in the counter compared with average volume of 5.15 lakh shares over the past two weeks.



The stock hit a high of Rs 345.20 and a low of Rs 327 so far during the day.

R. Mohan Das, director of personnel and industrial relations at Coal India was quoted by media as saying that the company is likely to sign a five-year wage pact with its leading workers' union in a meeting scheduled for the end of January 2012. The wage agreement, if signed, will be with retrospective effect from 1 July 2011, he added.

Reports suggest that Coal India increases wages of its mine workers every five years, while maintaining a minimum increases in allowances annually. Currently, Coal India's wage bill for its workers is Rs 15,000 crore a year and a 25% hike entails an additional financial burden of around Rs 4000 crore a year for five years with effect from July 2011.

The unions had taken an aggressive stance earlier, seeking a whopping 100% hike citing surging profits of the coal miner on the back of successive price hikes and a large initial public offering. They then demanded that the floor for starting negotiations should be a 24% hike and not 10% as demanded by the management.

The basic salary of a Coal India worker is around Rs 8,320 per month. While the All India Trade Union Congress (AITUC) had asked for a revised salary of Rs 16,000 per month, the Hind Khadan Mazdur Federation (HMS) had asked for a minimum revised basic of Rs 40,000 per month.

On a consolidated basis, Coal India's net profit rose 73.5% to Rs 2593.11 crore on 18.4% growth in net sales to Rs 13148.08 crore in Q2 September 2011 over Q2 September 2010.

Coal India (CIL) is the single largest coal producer in the world. Operating through 81 mining areas, CIL is an apex body with 7 wholly-owned coal producing subsidiaries and one mine planning and consultancy company. CIL also fully owns a mining company in Mozambique christened as 'Coal India Africana Limitada'. The Government of India owns 90% stake in CIL.