Due to salary hikes given to workers and executives, state-run Coal India Limited (CIL), which is also India’s largest coal producer, is going to absorb an excess wage bill of around Rs 7,000 crore in 2017-18. On October 10 last year, when the CIL announced the wage hike for its non-executive workers, it had stated that the average annual impact on the company would be Rs 5,667 crore. “We have to bear Rs 4,800 crore wage bill of this year (due to wage hike in October of CIL workers). Plus we have to bear a cost of Rs 1,500 crore of last year, which was not provided in our (account) books .This is an additional financial burden that we will have to bear this year. Plus the executives salary has been increased from January 1, and the impact of this will be of around Rs 1,000 crore. Therefore, we have to take into around Rs 7,000 crore into account. Even after this, we expect that the PBT level will remain similar to that of 2016-17,” said a senior CIL official. The company signed the tenth National Coal Wage Agreement with its four main trade unions on October 10, wherein it was decided that the non-executive workers will get 20 per cent salary increase starting retroactively from July 2016. This salary hike, which affected its 2,98,000 workers, is going to remain in place for five years. The workers were demanding a pay hike of 50 per cent. The Ministry of Coal stated on October 10: “To implement the agreement in totality, the payment of arrears would be made in three stages — 40 per cent, 30 per cent and 30 per cent. For the welfare of workers an amount of Rs 40,000 would be paid to the employees before Diwali as a one-time advance. CIL and its employees will contribute, for the first time, 7 per cent towards pension fund which will help retired employees to avail the pension facility.” In November last year, the CIL declared that it is going to increase the salary of its executive class too. It then stated that the impact of this hike will be of Rs 800 crore annually and it will be applicable retroactively from January 1, 2017. The CIL had a PBT of Rs 14,433 crore in 2016-17, which was around 32.67 per cent less than what it earned in 2015-16. The CIL spends around 40 per cent of its earnings on paying salaries to its employees. In 2016-17, the company spent Rs 33,514 crore on ‘employee benefit expenses’. “Even though we will spending a huge wage bill, we expect our revenue growth to remain at a rate of 5-6 per cent for next three years,” the CIL official added. The CIL is expected to touch 568 million tonne in 2017-18 and it will have more than 20 per cent of its production as inventory. In 2018-19, the target is 650 million tonne, of which 525 million tonne is demanded by the power sector.
