(Bloomberg) -- Coal India Ltd., one of the world’s top producers of the fuel, reported earnings tumbled on the surging cost of its wage bill and because it’s been largely unable to benefit from the fuel’s recent price boom.

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Net income at the state-run miner dropped 17% to 55.33 billion rupees ($676 million) in the three months through March from 66.93 billion rupees in the same period a year earlier, the company said Sunday in a filing. Shares fell as much as 3.1% in early Monday trading.

The producer struck a pact in January to raise base salaries of non-executive employees, who constitute more than 90% of its about 242,000 workforce. To meet the cost of the 19% hike, the company made 58.7 billion rupees of provisions during the quarter, compared with 4.8 billion rupees in the same period a year earlier.

“Profit after tax would have been the highest ever in any quarter had the provision not been made,” Coal India said in a separate press statement. Profit for the full year through March rose to a record, according to the company.

Read more: Coal to Dominate India Power Mix Despite Record Renewables Push

Coal is used to generate about three-quarters of India’s electricity and surging consumption has seen the supplier lift production and sales in recent months. Peak electricity demand hit a record in April, stoking fears of a repeat of disruptions last summer, when a surge in industrial and residential energy consumption overwhelmed supply.

Global coal suppliers saw profits turbocharged as prices soared in 2022 amid rampant demand as Europe and other regions turned to the fuel under efforts to shun Russian energy. State-run Coal India, in contrast, has had its main coal rates capped for the past five years, though did see earnings rise on material sold through auctions, according to its statements.

Kolkata-based Coal India reported higher shipment volumes and production. Output in the fourth quarter rose to about 224 million tons from 209 million tons in the same period in 2022.

The producer has said it has ample stockpiles to meet summer fuel demand, though limited rail capacity continues to challenge some producers in reaching far-flung consumers. Temperatures are also forecast to rise sharply in several parts of the country in coming weeks, which will add to pressure on supply.

--With assistance from Debjit Chakraborty.

(Updates with share price in second paragraph.)

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