Energy unlimited

Drilling the coal face in an underground mine.-PICTURES: BY SPACIAL ARRANGEMENT

COAL India Limited (CIL), a Navratna company headquartered in Kolkata, is the single largest coal producer in the world. It is also one of the worlds largest corporate employers, with over 4.04 lakh employees. The CIL, a holding company under the Ministry of Coal, was formed as a public sector undertaking (PSU) in November 1975 with the mandate to reorganise nationalised coal mines and ensure integrated development of the coal sector. The CIL has eight subsidiaries: Eastern Coalfields Ltd in West Bengal; Bharat Coking Coal Ltd, Central Coalfields Ltd and Central Mine Planning & Design Institute Ltd in Jharkhand; Northern Coalfields Ltd in Madhya Pradesh; Western Coalfields Ltd in Maharashtra; South Eastern Coalfields Ltd in Chhattisgarh and Mahanadi Coalfields Ltd in Orissa. The mines of North Eastern Coalfields in Assam and Meghalaya operate directly under it. The CIL operates in 81 areas and 473 mines spread over eight States. Its products include raw coal (coking and non-coking), washed coal, middlings, soft coke and hard coke, coal tar, coal gas and coal chemicals.

As the CIL turns 34 this year, it has adopted a multi-pronged strategy to make itself globally competitive by introducing state-of-the-art high technology and building capacity that encompasses different facets of the industry such as equipment utilisation, manpower deployment, introduction of modern management tools in marketing and human resources practices.

According to N.C. Jha, Director, Technical, CIL, for the Eleventh Plan Period, the CIL has planned 134 projects that would produce a total of 285 million tonnes of coal at a cost of Rs.26,000 crore; 65 projects have already been approved and are under implementation. For the year 2009-2010, we have set a production target of 435 million tonnes, and we are confident that by 2010-2011 we will achieve 490 million tonnes, Jha told Frontline. The company has set itself a target of producing 520.5 million tonnes in 2011-2012 and envisages reaching a production level of 664 million tonnes in 2016-2017.

Around 86 per cent of the CILs coal comes from opencast mines. Though the technology for such mining remains unchanged, the CIL has brought in new equipment to enhance production. Ideally, our production should have been 55 million tonnes more, but 17 important projects have been held up because we have not yet got environmental and forestry clearances, said Jha. Nevertheless, a number of expansion projects are under way to counter the impact of this.

Until 2006-2007, production from the CILs underground mines had been decreasing. From 67 million tonnes in the mid-1970s, it had come down to a little over 43 million tonnes by 2006. We managed to stop the decline in 2007-2008 by introducing new technology, and from 2008-2009 onwards, we have shown an upward trend, said Jha. At the present rate of production, there is a danger of the opencast mine reserves not lasting for more than 30 years; the CIL is refocussing on underground mining. We hope by the middle of the Twelfth Plan period we will achieve 50 per cent increase in underground production, but the bulk of the total production will continue from opencast mines, said Jha.

The CIL is planning to develop abandoned mines. It has identified 18 such mines, with estimated reserves of over 1,600 million tonnes of high-quality coal. It also plans to set up 19 washeries by the end of the next fiscal.

India is currently the 11th largest energy producer in the world, accounting for 2.4 per cent of the worlds annual production, and the sixth largest energy consumer, accounting for about 3.3 per cent of the worlds annual energy consumption. The countrys power sector is expected to grow exponentially with huge capacity addition. According to the New Coal Distribution Policy formulated by the government, the CIL has been given the mandate to meet the full demand for coal.

Although the total coal production for the present fiscal is targeted at 435 million tonnes, 437 million tonnes will be distributed; the additional two million tonnes are to come from the CILs stocks. Of this, 313 million tonnes will go to the power sector 306 million tonnes for the existing power houses and seven million tonnes for those power stations commissioned between April 2009 and March 2010.

Meeting this ever-increasing demand is a real challenge as the rate of growth in production is lower than the rate of increase in demand. To meet the balance requirement this year, we plan to import four million tonnes, A.K. Sarkar, Director, Marketing, CIL, told Frontline. The CIL recently invited expressions of interest to strike up joint ventures with companies in the United States, South Africa, Indonesia and Australia that could eventually export coal to India. It bagged through competitive bidding two virgin coal blocks in Mozambique. Acquisitions are also on the anvil through International Coal Ventures Ltd, a special purpose vehicle between the CIL, Steel Authority of India Ltd, National Thermal Power Corporation Ltd, National Mineral Development Corporation and Rashtriya Ispat Nigam Ltd.

The company is also aware of the need to address the imbalance in the ratio between the increase in the rate of demand and increase in the rate of production. The power sector needs to see whether there is optimum utilisation of coal. The consumption level in India is 7 kilogram per kilowatt. It should be seen whether this can be lowered, said Sarkar.

Said R. Mohan Das, Director, Personnel and Industrial Relations: One of our main focal areas has always been the morale of the employees. We were the first public sector undertaking to implement a formal wage agreement for the workers category. This has boosted the morale of everyone in the workforce and that is also evident in the first quarter results, which show a tremendous increase in production.

The company has also been on a recruitment drive after a gap of around 10 years. In 2008, 147 officers were recruited, and this year the number will increase to 357. Geologists are also being recruited. We are going in for campus recruitment in a big way, particularly from premier institutes like IIT and the National Institute of Technology. Moreover, owing to the salary revision of officers, we are able to attract the brightest people from various institutions, said Mohan Das. Training at the CIL has now become centralised and is imparted at the Indian Institute of Coal Management in Ranchi, Jharkhand. To get the best out of its employees, the CIL has introduced performance-related pay.

The CIL adopted a more project-affected-people-friendly rehabilitation and resettlement policy in March 2008. The company will be pursuing an inclusive model of growth by ensuring that project-affected people are included in the decision-making process and has plans to make them stakeholders in the project in their area.

The CIL is among the top corporates of India in terms of gross turnover, tax, and dividend capabilities. The compounded annualised growth rate of net sales and the net worth of the CIL over the previous five years is 12.11 per cent and 17.54 per cent respectively. It is practically a debt-free company, with a cash and bank balance of Rs.29,695 crore. CRISIL, a [credit-rating] company of Standards and Poor, has affirmed its long-term rating of AAA and a short-term rating of P1+ for the CIL, the highest ratings awarded by the agency, Shyamal Bhattacharya, Director Finance, CIL, told Frontline.

As in every PSU, the CIL also has a vigilance division. Our job is to see that public money is not wasted and that the work in the CIL is done properly and with minimum cost to the exchequer, N.R. Banerjee, Chief Vigilance Officer, CIL, told Frontline.