State-run miner Coal India (COAL.NS) posted a better-than-expected 54 percent rise in its December-quarter net profit, helped by strong production volumes and a price increase effected last February.

The company, which produces nearly 80 percent of the coal in India, said net profit for its fiscal third quarter jumped to 40.38 billion rupees from 26.26 billion a year earlier. Net sales rose to 153.49 billion from 126.87 billion in the same period a year ago.

Analysts, on average, had estimated net profit of 36.31 billion rupees on net sales of 157.2 billion rupees, according to a Reuters poll.

Coal accounts for more than half of power generation in Asia's third-largest economy, but the state miner has struggled to get swift environment clearances and land acquisition approvals for its mines, forcing expensive imports of more than 100 million tonnes annually.

On Monday, the Kolkata-based company said it produced 114.62 million tonnes of coal in the December quarter, up from 113.77 million tonnes a year earlier.

Margins rose on the back of price increases that it effected in February 2011, which are estimated to yield additional revenue of $1.4 billion annually.

The company, the world's largest coal miner, said it made an additional provision in its third-quarter results for the new wage pact that it signed with its workers on January 31, but did not provide details. It plans to make the rest of the provision in the March quarter, it said in a statement to the stock exchanges.

Last month, Coal India signed an agreement with its five recognised unions to increase wages by 25 percent. The pact, which will run until June 2016, is expected to add about 40 billion rupees to the company's annual wage bill.

Coal India reported employee benefit expenses in the December quarter rose 20 percent to 56.22 billion rupees. Provisions and writeoffs jumped nearly four-fold to 3.33 billion rupees.

The company provided 7.5 billion rupees for wage increase in the September quarter.

Last month, Coal India bowed to pressure from the Indian government and reversed a price increase after protests by power producers reeling from coal supply shortages.

It is currently implementing a new mechanism linking prices to gross calorific value (GCV) of the coal it produces, and will review the pricing mechanism in April.

Shares in Coal India, the country's fourth-most valuable company at $42.4 billion, closed 1.4 percent higher in a flat Mumbai market. The stock has risen 12 percent so far in 2012, compared to a 15 percent increase in the main index.

Source :in.reuters.com