Coal India Ltd’s Operating Margins Plunge: A Closer Look at the Numbers

Coal India

Coal India Limited, the state-run coal mining company, saw a year-on-year drop of 18% in its net profit to Rs 5,528 crore for the financial year 2019-20. However, the revenues increased by 17%, perhaps due to higher coal prices and increased demand for energy in the country. Despite the rise in revenues, the operating margins saw a significant drop of 907 basis points to 18.1%. There are a few reasons that could contribute to the declining profit margin, for instance, the company’s inability to increase coal production from its mines, leading to lower sales volume. Moreover, the increase in coal prices could have increased production costs. Coal India’s inability to adopt new technologies to enhance the efficiency of mines could also be a contributing factor to the declining margins.