Coal India averts strike with bonus pledge

A day’s strike may cost about 1.3 million tonnes in coal output and almost Rs 200 crore in revenue for the company

GN Bureau | September 27, 2013



Coal India Limited (CIL), the world’s largest producer of coal, averted a strike by its executives after assuring them of bonus payouts that may cost the state-owned company as much as $152 million.

According to officials demands for bonus payments due for the past six years will be met by October 31.

Frequent worker unrests at the nation’s second-biggest employer with 3,58,000 people have hampered production. A day’s strike may cost about 1.3 million tonnes in coal output and almost Rs 200 crore in revenue for the company that had cash reserves worth $10 billion as of March 31, according to a news report in the Mint.

Coal India, which is 90% owned by the state and fires about half of the nation’s electricity generation capacity, is under pressure to ensure uninterrupted shipments of the fuel. Blackouts shave about 1.2 percentage points off the growth of the $1.8 trillion economy, which is Asia’s third- biggest, according to government estimates.

The company reported its first annual decline in profit in five quarters for the three months ended June 30 after electronic auction prices dropped 16.4% because of lower demand. Operating margin for the period narrowed to 21.14% from 25.93% a year earlier.

Government rules prohibit performance-linked bonuses to employees of a loss-making company. Some of Coal India’s executives, who also work for its unprofitable units, were thus ineligible to receive the payments. To treat all the officers at par, the parent company’s board withheld bonuses from all of them until the issue is resolved.

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