High Labour Cost Hits Lanco's Griffin Coal Operations

Published: 08th January 2015 06:03 AM  |   Last Updated: 08th January 2015 06:03 AM   |  A+A-

HYDERABAD: Infrastructure firm Lanco Infratech Ltd said high labour cost is making its subsidiary Griffin Coal Mining Company in Collie, West Australia nearly unviable.

The company, which is reeling under financial stress, last month saw its contractor Carna Civil and Mining, who was responsible for operations, walking out of the project citing non-payment of dues.

“We are unable to operate, primarily due to high labour cost. For instance, a truck driver is paid over Rs.80 lakh to Rs.1 crore...it’s (labour expenses) shooting up our overall costs,” T Adi Babu, CFO, Lanco told Express. 

He added that the company was considering complete automisation of processes to undertake production.

Griffin Coal reported a net loss of Rs.714 crore (revenues of Rs.681 crore) during the last financial year owing to higher construction, development and generation expenses.

According to Babu, steps are underway to reach a short-term production target of 5 million tonnes by March 2015, and capacity enhancement programme has been raised to 15 million tonnes per annum and it is in the planning phase.

Production at the mine during 2013-14 was 2.83 million tonnes with sales of 2.95 million tonnes.

Meanwhile, the company is yet to rope in a strategic investor, who can pump in the much-needed capital to revive production in large scale. “There’s investor interest but the timing is not conducive yet. We are talking to them (investors) but nothing has been finalised,” Babu said.

Last year, the Bureau of Meteorology dragged Lanco’s Griffin to court over non-payment of an outstanding debt of $45,177 for dust and noise forecasting services provided between July 2012 and August 2013.

A legal suit was lodged in the Federal Court in Perth to have the company wound up after it allegedly failed to pay the debt. Subsequently, the Commonwealth of Australia lodged the court application to have Griffin wound up. Besides, the Australian tax authorities have also issued notices last year.

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