SUMMER TRAINING REPORT SUBMITTED TOWARDS THE

PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

MANAGEMENT
Production And Distribution of Coal By Central Coalfield Limited

SUBMITTED BY

NIRBHAY KUMAR
MBA-(2013-2015)
Enrollment No. : A30101913111

INDUSTRY GUIDE FACULTY GUIDE

Mr. V.N.RAM Mr. CHINTAN VADAGAMA
NODAL MANAGER
CENTRAL COALFIELD LIMITED

AMITY GLOBAL BUSINESS SCHOOL, NOIDA

AMITTY UNIVERSITY- UTTAR PRADESH
 CERTIFICATE OF ORIGIN

This is to certify that Mr. Nirbhay Kumar , a student of Post Graduate Degree in

Management, Amity Global Business School, Noida has worked in the

CENTRAL COALFIELD LIMITED., under the able guidance and supervision
of Mr. V.N.RAM , Nodal Manager of C.C.L, Piparwar Project.

The period for which he was on training was for 8 weeks, starting from 02/06/2014

to 30/07/2014.This Summer Internship report has the requisite standard for the

partial fulfillment the Post Graduate Degree in International Business. To the best

of our knowledge no part of this report has been reproduced from any other report

and the contents are based on original research.

Signature Signature

(Faculty Guide) (Student)

 ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr. V.N.RAM , Nodal

Manager of C.C.L ,Piparwar Project for his able guidance, continuous support
and cooperation throughout my project, without which the present work would not
have been possible.
I would also like to thank the entire team of C.C.L , for the constant support and
help in the successful completion of my project.
Also, I am thankful to my faculty guide Mr. Chintan Vadagama of my institute ,
for her continued guidance and invaluable encouragement.

Nirbhay Kumar
En No: A30101913111
 STUDENT’S UNDERTAKING

I do hereby declare that this piece of project report entitled “Production And
Distribution of Coal By Central Coalfield Limited” for partial
fulfillment of the requirements for the award of the degree of M.B.A. is a record of
original work done by me under the supervision and guidance of Mr. V.N.RAM ,
Nodal Manager, Central Coalfield Limited, Piparwar Project. This Project work is
my own and has neither been submitted nor published elsewhere.
 PREFACE

In order to achieve practical and concrete result, the classroom training needs to be
effectively suited to the realities of the situation existing outside the classroom.
This is particularly true of the management to develop healthy managerial and
administrative skills in potential manager, it is necessary that theoretical
knowledge must be supplemented with exposure to the real environment. Actually
it is a life for the management. It is in practical training that the measuring of the
management itself is realized.
I did my training in a well managed organization CENTRAL COALFIELD
LIMITED, Piparwar Project was fortunate to get training here as I got ample
opportunities to view the overall working of the company. Staff of the company
was very cooperative and friendly. In the following pages an attempt has been
made to present report covering different aspects of my training in the company.
 Table of content

1) Executive summary
2) Introduction
a) Types of coal
b) Production of coal in other parts of world
c) Objective
d) Gradation of coal

3) Research methodology

a) Research objective

b) Business research desgin

c) Research Plan

4) Industry profile

a) Review of literature

b) History

c) About CIL

d) Major companies

e) SWOT Analysis

5) Company Profile

a) History of B.C.C.L

b) organization chart

c) International Cooperation

d) Performance Graph

e) SWOT Analysis
6) Issue and challenges faced by organization

7) Findings of the project

8) Recommendation

9) Bibliography
 EXECUTIVE SUMMARY
INDUSTRY OVERVIEW

There are 21 coking coal washeries in production both in private and public
sectors. Production of clean coal in these washeries during 1989-90 was 12 million
tonne and it is expected to go upto 14 million, tone during 1990-91. There are 2
washeries under construction now and these are expected to be completed by 1995.
Present washeries face problems in optimum production more on quality aspects
than on quantity and it appears that trend of using imported coking coal of low ash
to blend with indigenous high ash coal for steel sector requirement, may continue
for some time to come on considerations of optimised steel production. Besides the
above coking coal washeries, Bina deshaling and Piparwar beneficiation plants are
in preliminary stages of construction in non-coking coal sector. Future prospects of
washeries for non- coking coal beneficiation, appear to be bright as, in view of
sharp rise in demand for coal, there is increasing trend in mechanised mining of
inferior seams resulting in deterioration in quality and consequent reluctance by
consumers to accept the same. Planning Commission has taken the decision that
non-coking coal meant for Thermal Power Plants situated far away from feeding
coalfield, should be beneficiated. The benefits of low ash coal burning in boilers
are realised but reimbursement of extra cost of beneficiation for washed non-
coking coal needs to be considered.

The highlights of the outcomes from this study are:


o The major role CIL is the price fixation of the coal according to their
grade to achieve business results.

o A number of pricing challenges were found , These include

Government rules and international market competition.

Major consumer of coal are public sector undertakings like

 Thermal power station
 Bricks industries
 Agriculture
 Steel industries
 Cement
 power
INTRODUCTION
INTRODUCTION ABOUT COAL
Coal is a readily combustible black or brownish-black sedimentary rock normally
occurring in rock strata in layers or veins called coal beds. The harder forms, such
as anthracite coal, can be regarded as metamorphic rock because of later exposure
to elevated temperature and pressure. Coal is composed primarily of carbon along
with variable quantities of other elements, chiefly sulphur, hydrogen, oxygen and
nitrogen.Coal begins as layers of plant matter accumulate at the bottom of a body
of water. For the process to continue the plant matter must be protected from
biodegradation and oxidization, usually by mud or acidic water. The wide shallow
seas of the Carboniferous period provided such conditions. This trapped
atmospheric carbon in the ground in immense peat bogs that eventually were
covered over and deeply buried by sediments under which they metamorphosed
into coal. Over time, the chemical and physical properties of the plant remains
(believed to mainly have been fern-like species antedating more modern plant and
tree species) were changed by geological action to create a solid material. Coal, a
fossil fuel, is the largest source of energy for the generation of electricity
worldwide, as well as one of the largest worldwide anthropogenic sources of
carbon dioxide emissions. Gross carbon dioxide emissions from coal usage are
slightly more than those from petroleum and about double the amount from natural
gas.[1] Coal is extracted from the ground by mining, either underground or in open
pits.

Types
Believed approximate position of the proto-continents toward the end of the
Carboniferous period; the light blue represents shallow seas where many of today's
coal deposits are found, as opposed to deeper waters which gave rise to oil-bearing
rocks derived from marine species. As geological processes apply pressure to dead
biotic material over time, under suitable conditions it is transformed successively
into

Peat, considered to be a precursor of coal, has industrial importance as a fuel

in some regions, for example, Ireland and Finland. In its dehydrated form,
peat is a highly effective absorbent for fuel and oil spills on land and water

 Lignite, also referred to as brown coal, is the lowest rank of coal and used
almost exclusively as fuel for electric power generation. Jet is a compact
 form of lignite that is sometimes polished and has been used as an
ornamental stone since the Iron Age

 Sub-bituminous coal, whose properties range from those of lignite to those

of bituminous coal are used primarily as fuel for steam-electric power
generation. Additionally, it is an important source of light aromatic
hydrocarbons for the chemical synthesis industry.

 Bituminous coal, dense mineral, black but sometimes dark brown, often
with well-defined bands of bright and dull material, used primarily as fuel in
steam-electric power generation, with substantial quantities also used for
heat and power applications in manufacturing and to make coke

 Steam coal is a grade between bituminous coal and anthracite, once widely
used as a fuel for steam locomotives. In this specialized use it is sometimes
known as sea-coal in the U.S.[2] Small steam coal (dry small steam nuts or
DSSN) was used as a fuel for domestic water heating

 Anthracite, the highest rank; a harder, glossy, black coal used primarily for
residential and commercial space heating. It may be divided further into
metamorphically altered bituminous coal and petrified oil, as from the
deposits in Pennsylvania

 Graphite, technically the highest rank, but difficult to ignite and is not so
commonly used as fuel: it is mostly used in pencils and, when powdered, as
lubricant.
 PRODUCTION OF COAL IN OTHER PARTS OF WORLD

Coal in Australia

Coal in Australia is mined in every state and territory of the country. It is used to
generate electricity and is exported. 75% of the coal mined in Australia is
exported, mostly to eastern Asia. In 2000/01, 258.5 million tonnes of coal was
mined, and 193.6 million tonnes exported. Coal also provides about 85% of
Australia's electricity production. In fiscal year 2008/09, 487 million tonnes of coal
was mined, and 261 million tonnes exported. Australia is the world's leading coal
exporter. Coal mining in Australia is controversial because of the burning of
exported and imported coal which contributes to climate change, global warming,
sea level rise and the effects of global warming on Australia.. The burning of coal
produces 42.1% of Australia's greenhouse gas emissions, not counting export coal,
based on 2004 GHG inventory.

FORMS OF COAL IN AUSTRAILIA

Two forms of coal are mined in Australia, depending on the region: high quality
black coal and lower quality brown coal. Black coal is found in Queensland and
New South Wales, and is used for both domestic power generation and for export
overseas. It is generally mined underground before being transported by rail to
power stations, or export shipping terminals. Black coal was also once exported to
other Australian states for power generation and industrial boilers.

Brown coal is found in Victoria and South Australia, and is of lower quality due a
higher ash and water content. As a result Victoria adopted German power station
and briquette technology in the 1920s to utilize the brown coal reserves of the
Latrobe Valley. Today there are three open cut brown coal mines in Victoria used
for baseload power generation.

Overview

Australia had 2009 coal production of 409.22 million tonnes, 6.68% of the world
total. The world's major producers are China, the USA, India, Australia, Russia,
Indonesia and South Africa. Australia had 2009 coal consumption of 50.82 million
tonnes oil equivalent, 1.55% of the world total.

Coal is Australia's major mineral export and accounts for nearly 25% of Australia's
export earnings. Australia is the world's 4th largest coal producer, and, according
to the 2008 BP Statistical Energy Survey, produced 393.92 million tonnes of coal
in 2007. Australia is also the world’s largest net exporter of coking and steaming
coal. According to the 2008 BP Statistical Energy Survey, Australia had end 2007
coal reserves of 76600 million tonnes, 9.03% of the world total and consumed
53.13 million tonnes oil equivalent. Australia exported 340.79 million tonnes of
coal in 2007. Japan is the destination for over 60 per cent of Australia’s coal
export.

98% of Australia’s export production coal deposits are located in Permian age
sediments (250 million years old) in the Bowen Basin in Queensland and the
Hunter Valley basins in New South Wales. Western Australia has some producing
mines south of Perth. Australia also has reserves of lower grade lignite coal,
located in Victoria. Coal is exported from nine terminals at seven ports along the
east coast. Australia’s coal industry is dominated by BHP Billiton, Anglo
American (UK), Rio Tinto (Australia-UK), and Xstrata (Switzerland).

BHP Billiton is the world’s largest supplier of seaborne traded hard coking coal
from its predominantly open-cut mines at its low cost asset base in Queensland
(owned in alliance with Mitsubishi Corporation) and New South Wales (100 per
cent owned).

COAL IN CANADA

The Canadian coal industry plays an important role in the Canadian economy, both
as a mining industry and as an energy provider. According to the 2008 BP
Statistical Energy Survey, Canada had 2007 coal production of 69.36 million
tonnes, 1.17% of the world total, while consuming 30.42 million tonnes oil
equivalent. Close to one half of Canada’s coal production is exported, primarily as
metallurgical coal.

Canada is a major coal producer and consumer, with, according to the 2008 BP
Statistical Energy Survey, end 2007 coal reserves of 6578 million tonnes.
Currently over half of Canada’s coal production is bituminous, with sub
bituminous and lignite the rest. Nearly 90% of Canada’s coal consumption is used
for power generation, with the remainder used in steelmaking. Coal only provides
10% of Canada’s energy requirements.
The main coal producing regions are in Alberta (nearly 50%), British Colombia
and Saskatchewan. Minor coal is produced along the east coast provinces of New
Brunswick and Nova Scotia.

Coal power in China

The People's Republic of China is the largest consumer of coal in the world and is
about to become the largest user of coal-derived electricity, generating 1.95 trillion
kilowatt-hours per year, or 68.7% of its electricity from coal as of 2006 (compared
to 1.99 trillion kilowatt-

hours per year, or 49% for the US). Hydroelectric power supplied another 20.7%
of China's electricity needs in 2006. With approximately 13 percent of the world's
proven reserves, China has enough coal to sustain its economic growth for a
century or more even though demand is currently outpacing production. China's
coal mining industry is the deadliest in the world and has the world's worst safety
record where an average of 13 people die every day in the coal pits, compared to
30 per year for coal power in the United States Coal production rose 8.1% in 2006
over the previous year, reaching 2.38 billion tons, and the nation's largest coal
enterprises saw their profits exceed 67 billion yuan, or $8.75 billion .

While China boasts the greatest use of coal power, it is third in the world in terms
of total coal reserves behind the United States and Russia. Most reserves are
located in the north and north-west of the country, which poses a large logistical
problem for supplying electricity to the more heavily populated coastal areas Coal
power is managed by the State Power Grid Corporation.
OBJECTIVE : Production and Distribution of Coal

Gradation of Coal
The gradation of non-coking coal is based on Useful Heat Value (UHV), the gradation of coking
coal is based on ash content and for semi coking / weakly coking coal it is based on ash plus
moisture content , as in vogue as per notification.

Grades of Coking Coal

Grade Ash Content

Steel Grade –I Not exceeding 15%
Steel Grade -II Exceeding 15% but not exceeding 18%
Washery Grade -I Exceeding 18% but not exceeding 21%
Washery Grade -II Exceeding 21% but not exceeding 24%
Washery Grade -III Exceeding 24% but not exceeding 28%
Washery Grade -IV Exceeding 28% but not exceeding 35%

Grades of Non-coking Coal

Grade Useful Heat Value (UHV) Corresponding Gross Calorific Value GCV
(Kcal/ Kg)
(Kcal/Kg) Ash% + Moisture %
(at 5% moisture level)
UHV= 8900-138(A+M) at (60% RH &
40O C)
A Exceeding 6200 Not exceeding Exceeding 6454
19.5
B Exceeding 5600 but not 19.6 to 23.8 Exceeding 6049 but not
exceeding 6200 exceeding 6454
C Exceeding 4940 but not 23.9 to 28.6 Exceeding 5597 but not
exceeding 5600 exceeding. 6049
D Exceeding 4200 but not 28.7 to 34.0 Exceeding 5089 but not
exceeding 4940 Exceeding 5597
E Exceeding 3360 but not 34.1 to 40.0 Exceeding 4324 but not
exceeding 4200 exceeding 5089
F Exceeding 2400 but not 40.1 to 47.0 Exceeding 3865 but not
exceeding 3360 exceeding. 4324
G Exceeding 1300 but not 47.1 to 55.0 Exceeding 3113 but not
exceeding 2400 exceeding 3865

Grades of Semi-coking and Weakly Coking Coal

Grade Ash + Moisture Content

Semi coking grade –I Not exceeding 19%
Semi coking grade –II Exceeding 19% but not exceeding 24%
Grades of NEC Coal :

Grades UHV (Kcal/Kg) Corresponding

Ash% + Moisture %age

A 6200-6299 18.85 – 19.57
B 5600 – 6199 19.58 – 23.91
 RESEARCH
METHODOLOGY
RESEARCH OBJECTIVE:

 To find out process of coal production

 To know about the distribution methods of coal

BUSINESS RESEARCH DESIGN:

Descriptive Research Design is the design followed in the study. As a part of

exploratory research, primary data has been collected and for the descriptive
purpose secondary data has been collected. Both these types of data have been
used for the study of derivative market and its knowledge in the minds of the
investors.

DATA:

The data which have been collected for this research purpose are taken from the
market in the form of primary data and secondary data.

a. Primary Data:

The primary data which have been used here is collected with the help interaction
with Nodal Manager of marketing and sales department , linkage, roadsales

b. Secondary Data:

The secondary data have been collected through available documents like articles
on derivative, news paper and websites.

RESEARCH PLAN:

Research plan for this study was to follow the collected information from the
Manager of various department and they told how they their plan works .
STASTICAL ANALYSIS:

Data analysis is done with the help of bar charts.

Coal Production Method

A five step process to deliver a quality product.

At Central Coalfield Limited, Piparwar Project, coal production takes place

through a five step process to deliver a quality product with a focus on reducing
long term environmental impact.

The five steps of the coal production process include:

1. Exploration & Development

2. Mining
3. Processing
4. Loading & Transportation
5. Rehabilitation

Step 1. Exploration & Development

The first stage to any coal production operation is exploration and development.
This takes place to locate and determine the most appropriate methodology to
extract the mineral. Exploration and development involves the combined efforts of
geologists, geotechnical engineers, mining engineers, coal technologists and
surveyors. The geologist is responsible for defining the shape, size and quality of
the coal reserves and for producing a computer model. This model is used by the
mining engineers to plan and manage the mining process taking into consideration:

 Mine wall stability.

 Scheduling of coal production at a consistent rate and quality.
 Controlling groundwater seepage and rainwater runoff.
 Mining block and backfill designs for minimal possible overburden
removal distance.
 Optimising equipment deployment and productivity.
 Minimising operational interruptions.
 Optimising drill and blast practices.

Surveyors support both the geologists and mining engineers by ensuring that the
data required for deposit modelling is correctly gathered in the first instance.
Surveyors also confirm that the engineers' mine plans are accurately reflected in
the mine development.

Step 2. Mining

Mining can take place through open cut or underground mining methods. At
Griffin Coal’s Collie mines open cut mining methods are used. The mining process
involves the removal of overburden and extraction of coal but can be considered as
four distinct operations:
1. Topsoil

Topsoil is removed ahead of mining and either spread directly on shaped

rehabilitation areas or stockpiled for later use. This operation is performed using
dozers, front end loaders and trucks.

2. Laterite

The cap rock (up to 2 metres thick) is either ‘ripped’ by dozers or blasted and
recovered for use as road surfacing material.

3. Overburden

All overburden apart from the ‘Nakina Formation’ is drilled with rotary ‘blast
hole’ drilling rigs and charged with bulk explosive, typically a mixture of
ammonium nitrate and fuel oil (ANFO).

After blasting, overburden is loaded by hydraulic excavator or front end loader into
rear dump trucks and placed in overburden dumps. Initially these had to be placed
out of the pit in order to create a large enough hole to work in. The worked over
areas of the pit are now filled in, a process known as backfilling.

When the mine gets to the back firing stage, the hole gets bigger and moves slowly
across the deposit. Then overburden materials are removed from the operating
faces and dumped into backfill on the other side of the mine.

4. Coal

When overburden has been removed from the coal seam, the roof of the seam is
cleaned using bulldozers. The coal seam is then drilled and blasted. Bulldozers
clean down to the floor of the coal seam and front end loaders and coal trucks
transport coal to either the Ewington Crushing Facility or direct to Muja Power
Station.

In some areas, coal can be loaded directly into trucks using a large backhoe,
without need for bulldozing. Once the coal has been extracted it is then processed.

Step 3. Processing

Processing involves crushing, screening and beneficiation.

Processing takes place at Central CoalField Limited. It is a process wherein coal is
converted from Run of Mine to a product that meets the customer's requirement.

Crushing

Mined coal can include lumps up to a metre in size, so crushing to a manageable

size is required. Coal crushing can include a two stage process dependant on
deposit size.

Crush One: Feeder Breaker

Coal is crushed in a feeder breaker, a chain conveyor under a toothed drum that
breaks the biggest lumps.

Crush Two: Sizer

Coal size is further reduced through a sizer, where each oversize particles are
reduced to less than 75 millimetres.

Screening

Screening is used to separate different sizes of crushed coal. In this process coarse
and fine coal is separated so to accommodate for specific markets and industrial
usage. Screening takes place at a processing plant adjacent to Ewington Mine.

C.C.L Coal’s screened coal is ideal for burning in horizontal kilns. In these kilns
uniform particle grading is used to create even combustion along the length of the
kiln. Coarser coal is also required by customers who burn coal in grate–fired
applications.

Beneficiation/Washing

Beneficiation has been trialled at Ewington. During beneficiation, coal is processed

to remove impurities reducing ash and sulphur thereby improving the market value
of the coal. Beneficiation can improve the quality of contaminated coal that would
otherwise be wasted.

Most cleaning processes involve washing the coal in order to separate coal
particles from stone particles as coal is considerably lighter.

Charring
Coal can be charred, a process wherein hydrogen and oxygen are removed from
the coal to make it purer form of carbon. Once processed according to
specifications, coal is loaded and transported accordingly.

Step 4. Loading & Transportation

DISTRIBUTION POLICY
Distribution of coal is done with the help of

 E-Auction
 By Road
 Railways

E-Auction

Some of the small sector company purchase the coal by e-auction.the e-auction is
classified into two categories i.e.:-

1. spot e-auction
2. forwarded e-auction

Objective:

Coal distribution through e-Auction has been introduced with a view toprovide
access to coal for such buyers who are not able to source coal through theavailable
institutional mechanism. In the long run it is expected that e-Auction mayhelp in
creating spot as well as future market of coal in the country.The purpose of e-
Auction is to provide equal opportunity to purchasecoal through single window
service to all intending Buyers.

E - Auction has been introduced to facilitate across the country wideranging access
to book coal on-line for all sections of coal Buyers enabling them to buy coal
through a simple, transparent and consumer friendly system of marketingand
distribution of coal.
Terms & Conditions

With reference to para VI (4) of the ‘e-Auction Scheme 2007’ for Spot-Auction the
detailed terms and conditions are given below :

1. Eligibility:

Any Indian Buyer (viz. individual, partnership firm, companies etc.) can
participate in e-Auction for procurement of coal.

2. Registration:

2.1 Before participation in the e-Auction, a prospective Buyer shall be required to

get itself / himself registered with the Service Provider appointed by the CIL / Coal
Companies for the purpose, by submitting an application in the prescribed format
available on the Website of the respective Service Providers. The application shall
be made along with the required documents such as copy of Income Tax
return(latest), PAN Number, Sales Tax / Vat Registration Certificate, SSI
Registration, Trade License, if applicable, Passport size photograph, etc. as
prescribed by the service provider. Registration can be done either online, or at any
of the front offices of the service provider.

2.2After the registration, all-prospective Buyers will have an auto generated

“Unique User ID” & a “password” based on which they can log in. Details of the
registration process with the service provider will be available in their respective
websites.

2.3The service provider shall issue “Photo Identity Card” to their registered
bidders duly authenticating the identity & signature, indicating a “Unique
Registration Number” allotted to them. The “Unique registration number” of the
registered bidders shall be communicated to the Coal Companies by the service
provider.

2.4Only one registration will be done against one PAN number. However, based
on more than one independent valid sales tax registration, more than one
registration against a PAN Number can be considered. In such cases, the details of
valid sales tax registration will be indicated in each ‘Photo Identity Card’.
2.5 All Buyers having been registered with the service providers shall also have to
furnish non-interest bearing Earnest Money Deposit (EMD) at the rate of Rs.200/-
per tonne, with the Service Provider. This EMD shall not be specific for a
particular Subsidiary Coal Company and shall be available with the Service
Provider for participation in the e-Auction across the Subsidiary Coal Companies
of CIL, as long as the required amount of EMD is available in the bidders a/c. with
the Service Provider.

3. Notification:

3.1 Coal companies would draw program for conducting at least two e-Auctions
per month and notify the same, minimum 7(seven) days in advance,through display
on the Company’s notice board and putting the same on the CoalCompany’s
websites for wide publicity. The program will be intimated to the Service providers
accordingly for hoisting the same on their websites also.

3.2 There will be separate auction for dispatches by rail and road mode.The
minimum quantity for bidding would be 50 (fifty) tonnes for a source for Road
mode, where as in case of Rail the minimum quantity for bidding would be 1
(one)rake. The rake size shall be as per prevalent Railway Rules. The quantity of
coal ina rake shall be as indicated in the notice of E-auction.

3.3 The Buyer should satisfy itself / himself about the Rake fit stations
/destinations from the Railways before participation in e-Auction by rail, Non
acceptance of the programme, even after the option exercised under extant Railway
rules, on account of rake-fit stations / destinations being not accepted by the
Railways shall be treated as a failure of the Buyer leading to forfeiture of relatable
EMD.

4. Bidding Process

4.1 The registered Bidders shall be required to record their acceptanceafter login,
of the Terms & Conditions of the e-Auction before participation in theactual
Bidding Process.

4.2 Before participating in e-Auction, bidders are to satisfy themselves with the
quality of coal being offered from a source.
4.3 Prospective Bidders are entitled to Bid for the quantity to the extent of amount
of EMD for which is available with the service provider in the bidder’s account at
the time of bidding.
4.4 The Buyers while bidding shall quote their “Bid price” per tonne in Indian
Rupee as base coal price on FOR/FOB colliery basis, exclusive of other charges
like statutory levies, surface transportation charges, sizing/beneficiation charges,
taxes, cess, royalty, SED, & any other charges as will be applicable at the time of
delivery. These charges as well as freight etc. shall be on the Buyer’s account.

4.5 The bidder has to bid for a price equal to or above the reserve price tosecure
consideration in the concerned e-Auction.

4.6 The date, time and period of e-Auction as notified in advance including closing
time on portal of service provider shall be adhered to but for the event offorce
majeure. However, the closing time of e-Auction will be automatically extended up
to last Bid time, plus 5 minutes, so that opportunity is given to other Bidders for
making an improved Bid on that item.

4.7 The Bidder shall offer his Bid price (per tonne) in the increment of 10/-
(Rupees ten) during the Normal e-Auction period. During the extended period of
first two (2) hours, the Bidder shall offer his Bid price in the increment of Rs.20/-.
Beyond this extended period of two hours the bid price increment would be Rs.
50/- (Rs.Fifty ) only.

4.8 While maintaining the secrecy of Bidder’s identity, the web site shall register
and display on screen the lowest successful Bid price at that point of time. The
system will not allow a Bidder to Bid in excess of his entitled quantity as per his
EMD.

However once a Bidder is out-bided by another (in part or full) the particular
Bidder shall become eligible for making an improved Bid.

4.9 Following criteria would be adopted in deciding the successful bidders:-

(a) Precedence will be accorded to the highest bid price in the descending order
(H1, H2, H3 and so on) as long as the offered quantity is available for
allocation.
(b) If two or more buyers bid the same highest price, precedence for
allotment.will be accorded to the buyer who has placed the bid for the higher
quantity.
(c) In case two or more buyers bid the same price and the same quantity,
precedence will be given to the buyer who has accorded his bid first with
reference to time.
5. Post e-Auction process:

5.1 Each successful bidder will be intimated through e-mail / SMS by the Service
Provider on the same date after the closure of e-Auction. However, it will be the
responsibility of the bidder to personally see and download the result displayed on
website, on the same date after close of e-Auction.

5.2 The successful bidders after the e-Auction, will be required to deposit coal
value with the concerned coal company, within a period of seven working days,
after the date of closing of e-Auction. Seven working days would be reckoned as
applicable to the respective Subsidiary Coal companies’ office where the
payment/deposit is required to be made.

5.3 Equivalent amount of EMD of successful bidder corresponding to successful

bid quantity, shall be blocked and will be transferred to Coal Company by the
service provider along-with the bid sheet in respect of successful bidders.

6. Terms of payment:

6.1 The coal value to be deposited in advance by the successful bidders shall be
computed and deposited after making provision for the EMD amount for the
successful bid quantity already transferred by the service provider to the
subsidiary company. In other words, the coal value to be deposited and EMD
amount together, shall be equivalent to the 100 % coal value.

6.2 EMD amount shall not be treated as an adjustment towards the coal value but
would stand converted into a ‘Security Deposit’ for performance of the bidders
towards completion of the said transaction.

6.3 The above security deposit (as converted from the EMD amount) would be
adjusted as coal value, only after completion of lifting of coal covered under coal
value paid, excluding security deposit. However, in the event of default in
performance by the bidder, the provision of forfeiture of the ‘Security Deposit’
(as converted from the EMD) as stipulated, would be applicable.6.4 In case of road
supplies, once the coal value is deposited by way of demand draft /pay order,
drawn in favour of the concerned coal company, along-with the debit advice issued
by the bank, certifying that the DD/pay order has been issued, by debiting the
account of the concerned Buyer, Sale/Delivery orders shall be issued within seven
days by the coal company after encashment of buyer’s financial instrument. In case
of successful bidders, if the coal value is deposited for less than the allotted
Quantity but not below 50% of the allotted quantity or, 50 tonne whichever is
higher, the coal company shall accept the payment for the said amount and forfeit
the EMD for the failed quantity. However if the buyer fails to deposit the coal
value for at least 50% of the allotted quantity or 50 tonnes whichever is higher
then the entire EMD of the allotted quantity shall be forfeited.

6.4 However, a successful bidder whose allotted quantity is only 50 tonnes will
be allowed to deposit coal value for minimum 90% i.e 45 tonnes within the
stipulated period of 7 days without which the amount shall not be accepted. In
such event they shall be permitted to deposit the balance fractional amount, limited
to 10% of the total coal value of 50 tonne, within the subsequent period of
3(three)working days. In spite of this, if they fail to deposit full coal value of 50
tone (minimum bid quantity), EMD for entire 50 tone shall be forfeited.

6.5 In case of rail borne supplies, there shall be two options available. While
submitting program, the bidder at his option can deposit 100 % BG on the
prescribed format from the buyers own account or else may deposit 100% amount
through demand draft /pay order, drawn in favour of the concerned coal company ,
along with the debit advice, issued by the bank certifying that the DD/pay order
has been issued by debiting the account of the concerned Buyer.

6.6 In case of Buyers who have booked their rail programme through BG, a
notice for deposition of coal value by way of DD/Pay order, will be displayed on
the notice board of the coal company, at least three working days in advance before
the expected date of offer to the Railways for allotment. The Buyer will be
accordingly required to deposit DD/Pay Order along with the debit advice to the
tune of BG involved in the programme, within 48 hours of such notice.In the event
of non-deposition of 100% coal value by the Bidder in terms of Clause-

6.7 above, the consent given against rake programme will be withdrawn by the
coal company and EMD as per e-Auction scheme will be forfeited.

6.8The Buyers shall also have the option of e-Payment

6.9 Coal companies is suitably developed & the same is notified on the websites
accordingly.
By Road:

1) Coal company shall issue Sale / Delivery Orders to the successful bidders
in terms of Clause 6.4 after realisation of payment. The Buyer has to submit
 the option before the issue of the Sale / Delivery Order for movement of the
coal “within state” or “outside state” and the Sale / Delivery Order would
indicate the Same accordingly. However, the challan issued by the Coal
Company shall indicate the destination.

2) The validity period to complete lifting of coal by road shall be 45 days

from the date of issue of Sale/Delivery Order. No extension of validity
will be allowed in any case.

By Rail:

1) The seniority of buyers in case of rail borne supplies shall be guided by the
seniority list as provided by the service provider based on buyer’s bids.

2) The quantity allotted against each rake is indicative quantity only and delivery
shall be made on the basis of actual weighment by the Seller at the loading end.

3) The validity period for seeking allotment of rake in case of rail supplies shall
be 45 days from the date of issue of consent by the coal company. Once the rake
is allotted it shall remain valid for supply of coal as per prevailing Railway
Rules.

4) Although loading will be the responsibility of the coal company, but to avoid
any complaint regarding over-loading, under loading and quality, the Buyer
himself or his authorized representative may supervise loading at the loading point.
The authorized representative must carry valid authority letter along with
photocopy of Identity Card issued by Service Provider.

Step 5. Rehabilitation
Restoring the environment to it's natural state.

Mine site rehabilitation is important to environmental sustainability.

Rehabilitation involves returning the land to it's natural state post mining
through strict, well researched strategies of revegetation and the regeneration
of natural ecosystems. Work to restore disturbed areas is carried out
progressively as soon as practicable.

C.C.L Coal’s environmental commitment includes the progressive

rehabilitation of its mining operations. The objective of mine rehabilitation is
to create a structurally stable landform capable of future productive use.

Rehabilitation also occurs to return land to a scale and morphology similar to

that which exists elsewhere in the Collie Basin.

Rehabilitation involves a comprehensive process of classifying overburden

material, land recountouring, seeding and regeneration.

1. Overburden Material Classification

Overburden material is classified according to its potential to cause geochemical

impacts (acid rock drainage) on the environment. Dumping of waste material is
undertaken so the best materials end up near the surface of waste landforms and
the other material is encapsulated in the middle.

2. Land Recontouring

When the landforms are no longer needed for mining or dumping purposes the
slopes are recontoured to around 10 degrees to control surface runoff and to ensure
stable slope. Topsoil is then spread to a depth of 150 millimetres before the area is
contour ripped, fertilized and seeded with local natives.

3. Seeding

Rehabilitation areas are seeded at the break of the winter rainy season, and initially
are susceptible to erosion damage until germination and root development has
occurred. Historically dumps were rehabilitated to pasture species. This approach
was chosen to stabilize the dump out-slope quickly to prevent erosion. More
recently efforts have been directed to the re-establishment of native flora.

4. Regeneration

Native species do not germinate and develop until the following spring, therefore
the potential for massive erosion is present during the winter. A strategy has been
developed whereby native bush species comprising grasses, groundcovers, shrubs
and trees, are sown together with a "nurse" crop of cereal rye.

The cereal rye germinates quickly and stabilizes the surface through the winter and
the natives emerge the following spring. The seed mix includes Jarrah, Wandoo,
Flooded Gum, numerous Acacias and under storey species.
INDUSTRY PROFILE
Review of literature on Coal India limited
Coal India Limited (CIL) is one of the largest coal producers in India. The
company is engaged in the mining of coal and coal based products. Further, it is
also engaged in providing mining consultancy services across India and abroad.
CIL is the largest company in the world in terms of coal production. It operates
through eight wholly owned subsidiaries namely, Bharat Coking Coal Limited;
Central Coalfields Limited; Western Coalfields Limited; Eastern Coalfields
Limited; Central Mine Planning and Design Institute Limited; Mahanadi Coalfields
Limited; South Eastern Coalfields Limited; and Northern Coalfields Limited,
Singrauli. The company is headquartered in Kolkata, West Bengal, India
Coal India Ltd. (CIL), a holding company, is wholly owned by the Government of
India through the Department of Coal and the Ministry of Mines and Minerals. CIL
is responsible for 88 percent of coal output in India. In 1999, production was 256.5
million tons of raw coal, up from 250.6 million tons the previous year. However,
like many state-owned concerns, CIL’s financial performance has been generally
poor.During the financial year 2000-2001, CIL reported a loss of Rs 1,400-crore—
a crore is equal to 10 million. At the start of the new millennium, the company
was under scrutiny by the Indian government for its performance and business
practices. Coal provides more than 67 percent of India’s energy requirements.
However, India’s per capita energy consumption is among the lowest in the world.
India has vast coal reserves, and these can be mined cheaply, although the coal is
generally of poor quality and has a high ash content. In 1998, India’s total coal
reserves were estimated at 200 billion tons, of which over 69 billion tons were
proven reserves. The bulk of India’s coal reserves are in the states of
Bengal, Bihar, Orissa, and Madhya Pradesh. Due to the structure of the coal
mining industry in India, CIL’s role is a major one, and its performance and
operations very much reflect the policies and priorities of the government of India.

History of CIL
The Indian energy sector is largely dependent on coal as the prime source of
energy. After the Indian independence, a greater need for coal production was felt
in the First Five Year Plan. In 1951 a Working Party for the coal industry was set
up, which suggested the amalgamation of small and fragmented producing units.
Thus the idea of a nationalised, unified coal sector was born. In the pre-
nationalised era coal mining was controlled by private owners, and suffered from
their lack of interest in scientific methods, unhealthy mining practices and sole
motive of profiteering. The miners lived in sub-standard conditions as well. 1n
1956, the National Coal Development Corporation (NCDC) was formed with 11
collieries with the task of exploring new coalfields and expediting development of
new coal mines.

Factors leading to the nationalisation of Indian coal industry Nationalisation of the

indian coal industry in the early 1970s was a fall-out of two events.

The first was the oil price shock, which led the country to take up a close scrutiny
of its energy options. A Fuel Policy Committee set up for this purpose identified
coal as the primary source of commercial energy. Secondly, much-needed
investment for growth of this sector was not forthcoming from the private sector.
The objective of nationalisation was the conservation of the scarce coal resource,
particularly coking coal, in India by:

 Stopping wasteful, selective and slaughter mining.

 Planned development of available coal resources
 Improvement in safety standards
 Ensuring adequate investment for optimal utilisation consistent with growth
needs
 Improving the quality of life of the workforce

Subsequently, in the context of safety, conservation and scientific development, the

Government of India took over all coking coal mines on October 16, 1971 and
nationalised them on May 1, 1972. Bharat Coking Coal Limited (BCCL) was thus
born. Following the state takeover of non-coking coal mines, Coal Mines Authority
Limited (CMAL) was formed in 1973, leading to the formation of a formal holding
company - Coal India Limited – on November 1, 1975.

Timeline

2008 : Coal India accorded ‘Navratna’ status

2007 : Coal India and four of its subsidiaries NCL, SECL, MCL, WCL
accorded ‘Mini Ratna’ status

2000 : De-regulation of coal pricing and distribution

1992 : Mahanadi Coalfields Limited (MCL) formed out of SECL to manage

the Talcher and IB Valley Coalfields in Orissa

1985 : Northern Coalfields Limited (NCL) and South Eastern Coalfields

Limited (SECL) carved out of CCL and WCL

1975 : Coal India Limited formed as a holding company with 5 subsidiaries:

Bharat Coking Coal Limited (BCCL), Central Coalfields Limited
(CCL), Western Coalfields Limited (WCL), Eastern Coalfields
Limited (ECL) and Central Mine Planning and Design Institute
Limited (CMPDIL).

1973 : Non-coking coal nationalised; Coal Mines Authority Limited CMAL)

set up to manage these mines; NCDC operations bought under the
ambit of CMAL

1972 : Coking coal industry nationalised; Bharat Coking Coal Limited

(BCCL) formed to manage operations of all coking coal mines of
Jharia Coalfield

1956 : National Coal Development Corporation (NCDC) formed to explore

and expand coal mining in the Public Sector

1955-56 : Focus on coal industry; capacity up to 38.4 million tonnes

1900 : Minimal development; river transportation used to transport coal to

Calcutta; railway lines at Calcutta leads to expansion of coal
production

1843 : Bengal Coal Company takes over Ranigunj Coal Mines and others; is
first Joint Stock Coal Company in India

1835 : Carr, Tagore & Company takes over Ranigunj Coal Mines

1815 - 1820 : First Shaft Mine opened at Ranigunj

1774 : Warren Hastings initiates commercial coal mining at Ranigunj (West
Bengal)

ABOUT COAL INDIA LIMITED

Coal India Limited (CIL), a holding company, is a state-owned mining corporation
and the largest coal producer in India. In 1990, production was 179 million tons of
hard coal, up from 172 million tons the previous year. This comprised almost 88%
of the coal output in India. However, like many state-owned concerns, CIL’s
financial performance has been generally poor, and it has made profits in only two
years since its creation in 1975. During the financial year 1989-1990 CIL made a
loss of Rs230 million. Although this loss was less severe than those made in the
period immediately after nationalization, it marked a decline from the previous
financial year when it made a profit of Rs82 million. Coal provides more than 50%
of India’s energy requirements. However, India’s per capita energy consumption is
among the lowest in the world. India has vast coal reserves, and these can be mined
cheaply, although the coal is generally of poor quality and has a high ash content.
In 1991, India’s total coal reserves were estimated at 176 billion tons, of which
over 30 billion tons are proven reserves, within 200 meters of the coal pit or the
workings. Of the total, coking coal—coal from which the volatile elements have
been removed, making it suitable as a fuel, and for metallurgical purposes—
comprises 24 billion tons (11 billion tons proven). The bulk of India’s coal
reserves are in the Bengal-Bihar coalfields in the west of the country. Due to the
structure of the coal mining industry in India, CIL’s role is a major one, and its
performance and operations very much reflect the policies and priorities of the
government of India.

The Indian coal industry has its origins in the early 19th century, when mining
activity became commercial in conjunction with the expansion of the railway
network, particularly in the west of the country. The monopoly interests of the
British East India Company were revoked in 1813. Initially, the coal fields were
operated by a large number of Indian private companies which possessed captive—
or company-owned—coalfields to support their iron and steel works. By 1900
there were 34 companies producing 7 million tons of coal from 286 mines.
Production continued to grow in the first half of the 20th century, especially during
World War I. Demand continued to grow during World War II, and production
reached 29 million tons by 1945. By then, the number of companies had increased
to 307, and the number of mines to 673. The trend continued for almost a decade
after India’s independence in 1947. However, India’s ambitious economic
development plans led to a tremendous demand for energy, and in the absence of
alternative sources, coal was targeted as the major source of power for
industrialization. Under the government’s Second Five Year Economic
Development Plan 1957-1961, a target of 60 million tons was set for the end of the
plan period. However, government economic planners were convinced that the
private sector would be unable to meet this target. Hence, the National Coal
Development Corporation (NCDC) was formed, which took the old railway
collieries as its nucleus and opened new mines as well. Production of coal
increased from 38 million tons in 1956 to 56 million tons in 1961.

During the 1960s, most of India’s collieries continued to be operated by the private
sector, with the exception of NCDC and the Singareni Collieries, both in the public
sector. At the national level, three factors emerged to force the government to
consider the nationalization of the coal industry. First, there was a fear that
contemporary mining methods were leading to great wastage. Second, the
government predicted that future demand for coal would be particularly heavy in
view of its industrial development priorities. Finally, during the Third Five Year
Plan 1962-1966, as well as the period 1966-1969, despite the increase in
production, there was a shortfall in private capital investment in the industry.

During the period 1971-1973, the government carried out a series of

nationalizations of the privately owned coal companies in a major effort to increase
production and overcome the shortage of coal. At the time of the nationalizations,
total coal production in the country was 72 million tons, and the industry had been
passing through cycles of shortages and surpluses which prevented effective
planning for expansion and modernization. There were over 900 mines in
operation, some of which were producing only a few thousand tons of coal a
month, and methods of mining were obsolete.

Coking coal mines, with the exception of the Tata Iron and Steel Company, were
nationalized in May 1972, and a new public sector company, Bharat Coking Coal
Limited (BCCL), was floated to manage them. In May 1973, the non-coking coal
mines were also nationalized and brought under the control of the Coal Mines
Authority (CMA). The Department of Coal was set up in the Ministry of Energy to
oversee the public sector companies. Further reorganization of the industry led to
the formation of Coal India Limited (CIL), which also absorbed NCDC, in
November 1975. The reorganization involved placing the majority of the public
sector coal companies under CIL. CIL has six subsidiaries. Five of these are
involved in production: BCCL, located at Dhanbad; Central Coalfields Limited at
Ranchi; Western Coalfields Limited (WCL) at Nagpur; Eastern Coalfields Limited
(ECL) at Sanctoria; and North Eastern Coalfields Limited (NECL) at Margherita;
the sixth is the Central Planning & Design Institute at Ranchi. Together with the
Neyveli Lignite Corporation (NLC), CIL is operated directly by the Indian
government through the Department of Coal in the Ministry of Energy. All the
subsidiaries of CIL have the status of independent companies, but the authority for
framing broad policies and taking administrative decisions rests with CIL.

The present structure of the Indian coal industry is a reflection of the priorities
placed by the government on coal as a source of fuel and energy in economic
development. Most of the production is the responsibility of the five subsidiaries of
CIL, but there are four other coal producers in the public sector: the Singareni
Collieries Limited, the government of Jammu and Kashmir collieries, the Damodar
Valley Corporation, and the Indian Iron & Steel Co. Ltd. These last four concerns
are responsible for about 10% of the output. Some 2% of the total output of coal is
provided by the captive mines—company-owned mines which ensure coal
supplies—of the Tata Iron and Steel Company, the only coal producer in the
private sector.

Financially, the subsidiaries of CIL have an average authorized capital of Rsl.5

billion each. Each employs between 100,000 and 180,000 people, and has an
annual turnover of between Rs.l.l and Rsl.7 billion. Their shares in the total
production of coal vary from 25 % for the Central and Western Coalfields, and
about 20% for Bharat Coking Coal and Eastern Coalfields. The financial
performance of the subsidiaries varies. BCCL made cumulative losses of Rs4.5
billon over the five year period 1981-1986. Similarly, Eastern Coalfields made
cumulative losses of Rs3.6 billion over the same five year period. In 1988, BCCL
made a loss of Rs900 million on a turnover of Rs5.3 billion. However, in the same
year the Neyveli Lignite Corporation Limited made a profit of Rs570 million on a
turnover of Rsl.9 billion.

As a result of the nationalizations, some rationalization took place in the sector.

The mines were regrouped and reduced to 350 individual mines. New technology
was introduced, and there was a shift from pick mining to blast mining, which
resulted in considerable increases in production. The latter totaled 87 million tons
in 1975, and 99 million tons in 1976. CIL’s share of total production was about
88%. Nationalization was intended to provide the basis for modernizing the coal
industry, but after the initial increase in production, output stagnated in the period
1976-1980. This was the result of shortages of power and explosives, labor unrest,
and absenteeism, excessive employment, technical inefficiencies, and problems of
flooding in the western coal fields, as well as fires in the vast Jharia coalfield. The
latter possesses the largest known coking coal reserves in the country and it has
been estimated that ongoing fires since around 1931 have accounted for the loss of
some 40 billion tons of coking coal. Consequently, CIL’S financial performance
was poor during this period. It suffered losses throughout the 1976-1981 period.
These losses peaked at Rs2.4 billion in 1978-1979, but came down to Rs882
million the following year, and came down even further to Rs337 million the year
after. Total losses for the five year period were almost Rs6 billion.

Production picked up in 1980 when it finally exceeded 100 million tons, and
increased to 115 million tons by 1983. However, the problems suffered by CIL in
particular and the coal industry in general had led to considerable shortages,
especially for industrial users. This shortage was compounded by the poor quality
of India’s coking coal, which has difficult washing characteristics and requires the
coal preparation plants to run extremely complex processes. The result was that the
country had to import coal from abroad, a trend that still persists. The bulk of the
imported coal came from the United States, Australia, and Canada, and was
significantly more expensive than locally produced coal. This situation had two
implications. First, it became feasible for CIL to adopt more expensive mining
methods, since they were still cheaper than the imported coal. Second, a need was
perceived to improve the coal handling facilities at India’s major ports. This need
was reflected in the Sixth Five Year Plan, when it was projected that the ports
would have to handle at least 4.4 million tons of imported coal by the mid-1980s.

During the Sixth Five Year Plan, coal production grew at 6.2% per year, especially
in the open-cast mines. Targeted production for the end of the plan period—1984-
1985—was for 165 million tons per annum, although actual production fell short at
148 million tons. During the first two years of the plan, CIL made a profit for the
only time in its history. This was argely due to the Indian government’s increasing
the price of coal in both February 1981and May 1982. The issue of pricing has
always been a serious problem for the Indian coal industry and for CIL. Coal prices
have been administered by the government since 1941, with the exception of a
period of seven years, 1967-1974. The pricing formula is based on an Indian
industry-wide average with differentials for different grades, but in practice the
price is usually set below the industry’s average cost. This practice may explain in
part CIL’s poor overall financial performance.

Coal production in the year 1981-1982 was 125 million tons, above the targeted
figure. Total production of coal and lignite was 146 million metric tons in 1983-
1984, and 155 million tons in 1984-1985, 162 million tons in 1985-1986, 175
million tons in 1986-1987, 191 million tons in 1987-1988, and 207 million tons in
1988-1989. Despite the increase in production, problems related to operations,
such as cost-overruns, poor quality, and low productivity, meant that targeted
output was frequently revised downwards. Part of the problem was the high cost of
new equipment necessitating new investment, since targeted budgets were overrun.
Furthermore, the number of mines, which had been reduced immediately following
nationalization, had again increased, to 684 by 1982, thereby negating some of the
initial cost reduction benefits of reorganization.

Since coal was meeting over 70% of the energy requirements of Indian industry,
CIL believed the output needed to increase by 25 million tons a year during the
1980s in order to keep up with demand. Demand for coal was projected to reach
165 million tons by 1985, 230 million tons by 1990, and over 400 million tons by
the year 2000. The structure of demand for coal had changed. The railways were
no longer the primary source of demand for coal.

Rather, demand now lay primarily with the steel plants, other industrial units, and
thermal power stations. The reliance on coal-fired thermal power plants for power
generation led to a steady increase in the demand for coal throughout this period.
To satisfy this demand, CIL relied primarily on the expansion of open-pit mines.
Mining coal from shallow seams was financially sound, but it resulted in a steady
deterioration of coal quality over time. The Seventh Five Year Plan of 1985
included some important changes introduced by CIL in the structure of its
production.

The plan had set a production target of 226 million tons for coal, and by 1988-
1989, output for coal alone, excluding lignite, had reached 195 million tons. As a
result of the greater need for coal, new opportunities were created for international
partnerships in the coal sector throughout the 1980s.
MAJOR COMPANIES

Baharat
Central
coking
coalfield
coal ltd
ltd

Singareni Estern
Collieries Coal field
company ltd
ltd

COAL
INDIA Mahana-
Western LTD nadi
Coal field coalfield
ltd Ltd

Northern
South
Coal field
Eastern
North ltd
Coal Field
Eastern
ltd
Coalfield
ltd
Major consumer of coal industries

percentage
3% 1%
3% 4%
middlings
16% NCW/coal
steel
cement
0.50% fertilizer
72%
brk&others
cons
power

SWOT ANALYSIS OF CIL

Strengths:

1. The government offers a wide range of concessions to investors in India,

engaged in mining activity. The main concessions include, inter alia:

* Mining in specified backward districts is eligible for a complete tax holiday for a
period of 5 years from commencement of production and a 30 percent tax holiday
or 5 years thereafter.

* Environment protection equipment, pollution control equipment, energy saving

equipment and certain other equipment eligible for 100 percent depreciation.
* One tenth of the expenditure on prospecting or extracting or production of
certain minerals during five years ending with the first year of commercial
production is allowed as a deduction from the total income.

Weakness:

 Most of the Indian mining companies do not have access to Indian capital
market
 There is a lack of respect for the mining industry and it suffers from the
incorrect perception that ore deposits are depleted.
 There is limited access to capital, and mines are increasingly more
costly to find, acquire, develop and produce.There are long lead times on
production decisions.
 The Indian mining industry suffers from an out-dated, unattractive
approach to mining education that is partly to blame for insufficient
human resources.

The Opportunities

 Considerable potential exists for setting up manufacturing units for value

added products. There exists considerable opportunities for future
discoveries of sub-surface deposits with the application of modern
techniques.
 Current economic mining practices are generally limited to depths of 300
meters and 25 percent of the reserves of the country are beyond this depth
 Strengthening of logistics in coal distribution - In India, the logistics
infrastructure such as ports and railways are overburdened and costly and act
as bottlenecks in development of free market. Privatization of ports may
bring the needed efficiencies and capacities. In addition, capacity addition
by the Indian Railways is necessary to increase freight capacity from the
coal producing regions to demand centers in the northern and central parts of
the country. On the Indian rail network, freight trains get a lower priority
than passenger trains, a problem that promotes delays and inefficiency.
Special freight corridors would raise speeds, cut costs, and increase the
system's reliability.
Threats:

 Large integrated international metal manufacturers including POSCO,

Mittal Steel and Alcan have announced plans for expansion in India
 Mining companies and equipment suppliers are under the constant
threat of being taken over by foreign companies.
 A heavy tax burden discourages further investment.
 Politicians undervalue the industry's contributions to the economy.
 Stricter environment rules restricting mining activities
COMPANY PROFILE
HISTORY OF C.C.L
Central Coalfields Limited – The Historical March

Central Coalfields Limited is a Category-I Mini-Ratna Company since October

2007. During 2009-10, coal production of the company reached its highest-ever
figure of 47.08 million tones, with net worth amounting to Rs. 2644 crore against a
paid-up capital of Rs. 940 crore.
Formed on 1st November 1975, CCL (formerly National Coal Development
Corporation Ltd) was one of the five subsidiaries of Coal India Ltd. which was the
first holding company for coal in the country (CIL now has 8 subsidiaries).

Early History – Formation of NCDC (Pre-nationalisation)

CCL had a proud past. As NCDC, it heralded the beginning of nationalization of

coal mines in India. National Coal Development Corporation Ltd. (NCDC) was set
up in October, 1956 as Government-owned Company in pursuance of the
Industrial Policy Resolutions of 1948 and 1956 of the Government of India. It was
started with a nucleus of 11 old state collieries (owned by the Railways) having a
total annual production of 2.9 million tonnes of coal. Until the formation of
NCDC, coal mining in India was largely confined to the Raniganj coal belt in West
Bengal and the Jharia coalfields in Bihar (now in Jharkhand), besides a few other
areas in Bihar (now in Jharkhand) and a part of Madhya Pradesh (now
Chattishgarh also) and Orissa. From its very beginning, NCDC addressed itself to
the task of increasing coal production and developing new coal resources in the
outlying areas, besides introducing modern and scientific techniques of coal
mining.

In the Second Five Year Plan (1956-1961) NCDC was called upon to increase its
production from new collieries, to be opened mainly in areas away from the
already developed Raniganj and Jharia coalfields. Eight new collieries were
opened during this period and the production increased to 8.05 million tonnes by
the end of Second Plan. During Third Five Year Plan (1961-1966), though the
Corporation had built up a much larger production capacity, it could not be utilized
due to a sluggish domestic coal market. Production had, therefore, to be pegged
down and the development of several collieries undertaken from the early part of
the Plan period, had to be suspended. By this time, the contribution of NCDC to
the nation’s coal production (67.72 million tones) increased to around 9.6 million
tonnes.

With gradual rise in the demand of coal due to commissioning of new power plants
and development of other coal-based industries during Fourth Five Year Plan
(1969-1974), NCDC’s production increased to 15.55 million tonnes by the
terminal year of Fourth Five Year Plan, i.e, 1973-74.

Fig. Shovel loading a

bottom discharge dumper in
an opencast mine in 1977-
78

Fig. Shovel loading a rear

discharge dumper in an
opencast mine 2009-10

NCDC played a pioneering role in India’s coal industry by introducing large-scale

mechanization and modern and scientific methods of coal mining for promoting
conservation of high grades of coal and exploiting deep coking coal seams
necessitating heavy capital investment and sophisticated technical skill. NCDC
went in for foreign collaboration with countries such as Poland and the USSR
besides limited collaboration with Japan, West Germany and France.
NCDC’s role can be truly assessed by its contribution towards growth of new coal
resources in, what are known as, the outlying areas. The opening of new mines in
Madhya Pradesh, Orissa and Maharashtra brought about a significant change in
these regions by creating new opportunities of industrialization and employment.
Development of the Singrauli coalfields has brought coal almost to the door steps
of northern India. With the development and application of improved mining
techniques, emphasis on planning, design and research; introduction of modern
mine management systems and an enlightened industrial relations policy, NCDC
was able to provide the infrastructure for the total nationalization of coal industry
in the country.

Nationalisation of Coal Mines:

A major event in the history of Indian coal industry during the Fourth Plan Period
(1969-74) was the nationalisation of the erstwhile privately owned coal mines in
two phases. In the first phase, the management of coking coal mines was taken
over by the Government of India on 17th Oct. 1971 and nationalization was
effective from 5th January 1972. A state owned company, Bharat Coking Coal Ltd.
was formed for managing coking coal mines. For convenience of management,
BCCL collieries in the East Bokaro coalfields in Bihar (now Jharkhand) were
transferred to NCDC, and its projects in Central Jharia region viz., Sudamdih and
Moonidih deep shaft mines were handed over, in stages to BCCL.
In the second phase of nationalisation, the management of non-coking coal mines
in the country, excepting the captive coal mines of the two steel plants, viz, TISCO
and IISCO, was taken over by the Government on 31st January 1973. These mines
were subsequently nationalized with effect from 1st May 1973 and another state-
owned company, Coal Mines Authority Ltd. (CMAL) came into being with
headquarters at Calcutta (now Kolkata) to manage and develop NCDC collieries
and other newly nationalized units. NCDC itself, in this process, became a division
of CMAL which owned 36 collieries under commercial production in Bihar,
Orissa, Madhya Pradesh and Maharashtra, besides four coal washeries, one by-
product coke oven plant, two large central workshops and manpower of about
71,000.

The formation of CMAL witnessed regrouping of the coal mines into three
divisions, namely, Western, Central and Eastern. The regrouping had to be done
for the convenience of management, keeping in view the geographical location of
the collieries.

 As a result, NCDC units located in the States of Maharashtra and Madhya

Pradesh, with the exception of Singrauli coalfields, became a part of the
Western Division.
 The Central Division consisted of all the old collieries of NCDC in Orissa
and Bihar (except Sudamdih and Moonidih which had been handed over to
BCCL) and those acquired by CMAL after take-over in Giridih, East
Bokaro, West Bokaro, South Karanpura, North Karanpura, Hutar &
Daltongunj Coalfields in Bihar. The Central Division consisted of 64
collieries, four coal washeries, one by-product coke oven plat, on bee-hive
coke plant and one central workshop having a manpower of 1,11,500.

Formation of CCL
  The CMAL, with its three divisions continued upto 1st November 1975
when it was renamed as Coal India Limited (CIL) following the decision of
Govt. of India to restructure the coal industry. The Central Division of
CMAL came to be known as Central Coalfields Limited and became a
separate company with the status of a subsidiary of CIL, which became the
holding company.

ORGANIZATION CHART
 Performance growth of C.C.L
.
RAW COAL PRODUCTION

450

400

350

300

250

200

150

100

50

0
1974-75 1991-92 1996-97 2001-02 2006-07 2007-08 2008-09
MAN POWER

800000

700000

600000

500000

400000

300000

200000

100000

0
1.4.1975 1.4.1992 1.4.1997 1.4.2002 1.4.2006 1.4.2007 1.4.2009
PRODUCTIVITY

4.5

3.5

2.5

1.5

0.5

0
1974-75 1991-92 1996-97 2001-02 2006-07 2007-08
 SWOT Analysis of C.C.L
1.
* Export profits from specified minerals and ores are eligible for
certain concessions under the Income tax Act.
* Minerals in their finished form exempt from excise duty.
* Low customs duty on capital equipment used for minerals; on nickel,
tin, pig iron, unwrought aluminium.
* Capital goods imported for mining under EPCG scheme qualify for
concessional customs duty subject to certain export obligation.

2. World's largest producer of mica; third largest producer of coal and

lignite & barytes; ranks among the top producers of iron ore, bauxite,
manganese ore and aluminium.
3. Labours easily available
4. Low labour and conversion costs
5. Large quantity of high quality reserves
6. Exports iron-ore to China and Japan on a large scale

Weekness
 Mining operations are not environment friendly. Least importance is given
to environment concerns.
 High rate of illegal mining
 Coal mining in India is associated with poor employee productivity. The
output per miner per annum in India varies from 150 to 2,650 tonnes
compared to an average of around 12,000 tonnes in the U.S. and Australia;
and
 Historically, opencast mining has been favored over underground mining.
This has led to land degradation, environmental pollution and reduced
quality of coal as it tends to get mixed with other matter;
 India has still not been able to develop a comprehensive solution to deal with
the fly ash generated at coal power stations through use of Indian coal.

Opportunities

 Considerable potential exists for setting up manufacturing units for value

added products.
 There exists considerable opportunities for future discoveries of sub-surface
deposits with the application of modern techniques.
 Current economic mining practices are generally limited to depths of 300
meters and 25 percent of the reserves of the country are beyond this depth
 Strengthening of logistics in coal distribution - In India, the logistics
infrastructure such as ports and railways are overburdened and costly and act
as bottlenecks in development of free market. Privatization of ports may
bring the needed efficiencies and capacities. In addition, capacity addition
by the Indian Railways is necessary to increase freight capacity from the
coal producing regions to demand centers in the northern and central parts of
the country. On the Indian rail network, freight trains get a lower priority
than passenger trains, a problem that promotes delays and inefficiency.
Special freight corridors would raise speeds, cut costs, and increase the
system's reliability.

Threats

 Foreign Investment in the Mining Sector

During 1999, the Government had cleared 7 more proposals of leading

international mining companies for prospecting and exploration in the
mineral sector to the tune of US$ 62.5 million. 65 licenses have been issued
till date for prospecting an area of around 90,142 sqkms in the states of
Rajasthan, Maharashtra, Gujarat, Bihar, Haryana and Madhya Pradesh.
Prospecting licenses have been granted in favour of Indian subsidiaries of
well-known mining companies. These include BHP Minerals, CRA
Exploration supported by Rio Tinto (RTZ-CRA), Phelps Dodge of USA,
Metmin Finance and Holding supported by Metdist Group of Companies
UK, Meridien Minerals of Canada, RBW Mineral Industries supported by
White Tiger Resources of Australia, etc.
 Large integrated international metal manufacturers including POSCO,
Mittal Steel and Alcan have announced plans for expansion in India
 A heavy tax burden discourages further investment.
 Politicians undervalue the industry's contributions to the economy.
 Stricter environment rules restricting mining activities
ISSUE AND CHALLENGES
FACED BY
ORGANISATION
 coal supply to power sector is to be improved further.
 Rules and regulation of the government .
 Less number of rakes or wagon are used.
 strict monitoring and strong deployment of security forces to curb the
illegal activities.
 Coal India will address the problem of shortage of man power
particularlarly the statutory category
 Delay in supply of equipment.
 Poor performance by one party to whom the outsourcing contract
was awarded and non-commencement of work by another party who
was awarded outsourcing job for removal of OB
 Ageing of equipment deployed in mines
 Safety


FINDINGS OF MY
PROJECT
 C.C.L have proper distribution system of coal.
 Public sector companies are major consumer of coal.
 Here is the competition of coal is with international market.
 Prices are set by the ministry of coal which is not up to the mark.
 It has very limited area to work.
 RECOMMENDATION

 use new technology for mining.

 They should take more safety measures for mining.
 Increase the number of rakes and wagans.

BIBLIOGRAPHY

 www.google.com
 http://www.coalindia.in/
 http://www.bccl.cmpdi.co.in/
 Magazines of navratan company
 News paper