Coal India Ltd., the state-run mining giant, saw its profits drop by 17% in the last quarter. This decline is largely due to a slow economy that has led to only moderate growth in coal consumption. Coal is vital for India, powering nearly three-quarters of the country’s electricity.
In the three months ending in December, the company reported a profit of 85.1 billion rupees, down from 102.5 billion rupees the previous year. Despite this drop, the result was better than what analysts expected.
The slowdown in the economy is affecting the power sector. Electricity demand increased by just 2.7% during this quarter, significantly less than the 10% growth seen the year before. If this trend continues, it might discourage investment and complicate efforts to expand capacity.
India, which is the world’s third-largest carbon emitter, is still heavily reliant on coal to meet its energy needs. To address future demand, the government plans to add nearly 90 gigawatts of coal-fired power by 2032.
Coal India has also changed its accounting policies. The update allows the company to allocate fewer funds for removing earth covering the coal seams, which has positively impacted its earnings.
During this period, both shipments and production rose by 1.5% compared to last year. However, the company faces some pressure to reduce production temporarily and manage its inventory. Experts predict that production will likely increase again as summer arrives.
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Coal India, third-quarter profit, slowing economy, electricity consumption growth, carbon emitter
