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Updated:18 Aug, 2022, 15:59 PM IST

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I am delighted to welcome you to the 39th Annual General Meeting of Coal India Limited (CIL). The Directors' Report and Audited Accounts for the year ended 31st March, 2013, together with the report of Statutory Auditors, and report and review of Comptroller & Auditor General of India, are already with you.

1. Importance of Coal

Energy is a prerequisite in the economic development of any country. In developing countries, the energy sector plays a critical role in view of the ever–increasing energy needs. Enormous investments are necessary to secure the same.

India is one of the fastest growing economies of the world. Coal dominates the country's energy mix. It contributes over 50% of India's total primary energy production. The mineral is expected to continue playing a crucial role in meeting India's future energy needs.

CIL accounted for about 81% of the total coal produced in the country during fiscal 2013. There appears to be no dearth of market for the mineral, if it can be produced at a reasonable cost on a sustainable basis. India's coal industry shall continue its dominance as the primary source of energy for most part of the 21st century.

India's ever–increasing demand for coal is expected to touch 980.5 Mt by 2016–17. Of this, the demand from the power sector constitutes about 70%. However, indigenous coal availability is projected optimistically at 795 Mt. Hence, major production constraints need to be addressed to boost production capacity. Some of the steps that need to be undertaken include enhancing drilling for coal exploration, fast–tracking land acquisition and R&R issues, avoiding delays in obtaining environmental and forestry clearances, timely completing construction of infrastructural facilities for coal evacuation and providing greater thrust on R&D activities in the coal sector. Unless these issues are resolved in a manner conducive to exploitation, extraction and expansion of coal reserves, there will always be a demand–supply gap for coal. To bridge this shortfall, coal needs to be imported.

2. Vision

The strategic vision of CIL is to place itself on a path of accelerated growth with enhancement in productivity, competitiveness and profitability, while meeting the growing demand of coal in the country in an environmentally and socially sustainable manner. The Board of Directors of CIL had approved the recommendations of KPMG and adopted the corporate plan titled 'Vision 2020'. Vision 2020 envisages various measures aimed at improving coal supply and capability building. Necessary actions have been initiated to implement the suggestions. KPMG is currently engaged in providing implementation–related assistance to CIL.

3. Activities

We are the largest coal producing company in the world. We produced 452.21 MT during 2012–13.We produce coal through seven of our wholly–owned subsidiaries in India. Another wholly owned subsidiary, CMPDIL, carries out exploration activities for our subsidiaries. It also provides technical and consultancy services for our operations as well as to third–party clients for coal exploration, mining, processing and related activities. We have also established a wholly owned subsidiary in Mozambique, Coal India Africana Limitada (CIAL), to pursue coal mining opportunities in the country. We have our core competence across the entire coal business value chain, starting from exploration, planning and design operations, beneficiation and marketing. Our principal product is raw coal, primarily non–coking. We are also looking for diversification opportunities in areas of coal bed methane, coal gasification, coal liquefaction and power generation. 

4. Performance Highlights, 2012–13

We have achieved impressive results with significant growth in production, off–take and profitability during 2012–13. It indicates the robustness of our strategy to maximise coal dispatch to our esteemed consumers. This performance is particularly remarkable when viewed against the backdrop of extremely challenging demand–supply scenario prevailing in the country. We recorded an impressive growth of 32.1 MT in coal off–take, a growth of 7.41% over the previous year. Raw coal off–take touched 465.18 Mt during 2012–13 compared to 433.08 MT in 2011–12. The dispatch performance this year has reversed the usual trend of production exceeding off–take, which has soared coal production by about 13 MT in 2012–13. There has also been a growth of 16.4 MT in coal production over last year, a growth of 3.8%. Production of raw coal during 2012–13 was 452.21 MT as against 435.84 MT in 2011–12. Overburden removed during the year was 746.70 Million Cubic metres as against 735.14 Million Cubic metres in 2011–12, up by 11.56 Million Cubic metres.

We are one of the largest profit making and tax & dividend paying enterprises in India. Aggregate pre–tax profits for CIL and its subsidiaries increased by 17.42% from Rs. 21,272.66 crores in 2011–12 to Rs. 24,979.04 crores for 2012–13.

Your Directors recommended dividend payment of Rs. 8,842.91 crores at Rs. 14/– per share on 6316364400 Equity Shares of Rs. 10/– each, fully paid value at Rs. 6316.36 crores. Out of total dividend, Government of India gets Rs. 7,958.62 crores and other shareholders get Rs. 884.29 crores. (Previous year, Government of India received Rs. 5,684.72 crores and other shareholders got Rs. 631.64 crores).

5. Introduction of Mine–Developer–Operator

In order to step coal production to meet growing demand for coal, it has now been decided to work through the Mine–Developer–Operator (MDO) mode. We propose to take up seven mines in the first phase and expand later, based on experience.

Under this concept, MDO shall develop, operate the mine and be responsible for detailed designing, financing, procurement, construction, operations and maintenance of all infrastructures, including coal washery, loading arrangement etc. Further, the MDO/Participating Company will facilitate possession of land and R&R activities, preparation and clearance of EIA–EMP, and forestry clearance. However, CIL will directly obtain approval of EMP & FC. The MDO on the other hand will be responsible for environment monitoring and management, reclamation and mine closure (progressive and final).

All activities within the mine premises and till the loading of coal in rail wagons, according to agreed Annual targets, shall be the MDO's responsibility.

6. Accelerate the Power Generation from New Power Plants

Government of India, having considered the likelihood of commissioning further 60,000 MW, decided to revise the trigger level for coal supply from 50% to 80% of Annual Contracted Quantity. The Government also decided to revise the tenure of Fuel Supply Agreement from 5 years to 20 years. Accordingly, a Presidential Directive was issued to this effect on 4th April, 2012 to modify the Fuel Supply Agreements (FSA) for execution with new Power Plants having long–term Power Purchase Agreements (PPA) with the DISCOMs. Till 31st March, 2013, 61 units signed FSAs for 88.8 MTY.

7. Initiative for Overcoming Logistic Bottleneck

We came out with a scheme for supply of coal 'As is – Where is' basis to its power consumers under FSA, to be lifted by the purchaser by arranging their own logistics from the stock points. The scheme aimed at augmenting coal dispatch capacity, which is constrained due to various logistics issues restricting transportation to dispatch points.

The FSA offers similar provision for the Seller to offer coal upto 5% of the Annual contracted quantity. For this, consumers use their own transportation arrangements, either by Road or Road–cum–Rail (R–C–R) mode in three coal companies, namely CCL, MCL and SECL. Logistics inadequacy in these three companies in terms of new rail connectivity has restrained coal evacuation potentials of these companies. 

8. Growth Profile

Ongoing Projects

We have 148 on–going projects, costing Rs. 2 Crs and above, which are under different stages of implementation. The ultimate capacity of these projects is 446.75 Mty, with sanctioned capital outlay of Rs. 32,004.54 Crs.

Out of this, 85 ongoing projects contributed to the tune of 212.04 Mt. during the terminal year of XIth Five Year Plan, i.e. 2011–12. However, during the 1st year of the XIIth Five Year Plan, 90 ongoing projects contributed 260.80 Mt. The envisaged contribution during the terminal year of the XIIth Five Year Plan, i.e. 2016–17, is 335.46 Mt from 134 ongoing projects.

Out of these 148 ongoing projects, both forestry and environmental clearances have already been received for 90 projects. Environmental and forestry clearances are awaited for 9 and 34 projects respectively. For the remaining 15 projects, both forestry and environmental clearances are awaited.

Future Projects

A total of 126 projects, with an estimated capacity of 438.04 Mty, have been identified. These projects will be taken up during the XIIth Five Year Plan. Out of these future projects, 60 projects are envisaged to contribute about 88 Mt during the terminal year of the XIIth Five Year Plan, i.e. 2016–17.

Out of these 126 identified projects, PRs for 78 projects have already been formulated. Four projects, having an estimated capacity of 12.50 Mty with an investment of Rs. 2294.79 Crs, have been sanctioned during the XIIth Five Year Plan.

9. Forestry and Environmental Clearances

Forestry Clearance

During the XIth Five Year Plan, Forestry Clearances for 56 proposals, involving an area of 7095 Ha, have been obtained from MoEF. The contribution from such projects involving these 56 forestry proposals granted clearance was 77.5 Mt during the year 2012–13. So far, five forestry proposals covering an area of 538 Ha have also been cleared by MoEF during the first year of the XIIth Five Year Plan, i.e. 2012–13. The contribution from such projects involving these 5 forestry proposals was 0.85 Mt during the year 2012–13.

However, at present, 193 forestry proposals are awaiting clearances either at MoEF or at state levels. These projects together cover an area of 29500 Ha.

Environmental Clearance

122 environmental clearance proposals for a capacity of 207 Mty have been cleared by MoEF during the XIth Five Year Plan. So far, 30 environmental clearance proposals, for a capacity of 100 Mty, have also been approved by MoEF during the first year of XIIth Five Year Plan, i.e. 2012–13.

However, at present, 48 environmental clearance proposals, having a capacity of about 109 Mty, are awaiting clearances at different levels.

10. Other Strategies

To augment underground production, semi–mechanised Bord and pillar mining with Load Haul Dumper (LHD)/Side Discharge Loader (SDL) loading with continuous coal evacuation system are being planned. Universal Drilling Machines (UDMs) are also being deployed to increase the productivity of SDL/LHD mines. They also help to ensure safety of the workers in the mines. Mass production technology methods with Continuous Miner (CM) and Power Support Longwall (PSLW) faces, are now being planned to be introduced in phases in some of the underground mines. Man–riding system is being installed in underground mines to fully utilise shift hours. This is expected to increase productivity and reduce the arduous travelling time of the personnel in underground. 

11. Coal Beneficiation

CIL operates 17 coal washeries with a total capacity of 39.4 Mty. Out of these, 12 are coking coal washeries with a total capacity of 22.18 Mty, while five are non–coking coal washeries with a total capacity of 17.22 Mty.

Contracts have been finalised for three more washeries. Besides, action to finalise two more washeries is in advanced stage. Further, 12 more washeries have been identified to be taken up during the XIIth Five Year Plan.

12. Foreign Venture initiatives

A. Activities of CIAL, Mozambique

CIAL, a wholly owned subsidiary of CIL in Mozambique, has been operationalised in February 2012. An office has been set up in the city of Tete, Mozambique. A four member team of senior officers has been deputed. Various activities related to exploration of coal blocks have been initiated. Some of these activities are as follows:

i. Nearly 5,100 Mtrs of initial exploration drilling in the two allotted coal blocks have been completed till the end of March 2013. Shri Pratik Prakashbapu Patil, the Hon'ble Minister of State for Coal, Government of India, inaugurated this Initial exploration drilling programme for 10,000 metres in November 2012.

ii. A global tender for carrying out additional 30,000 metres of drilling in the allotted coal blocks has been floated in February 2013 and finalised in June 2013.

iii. We received environment clearance from the Government of Mozambique in July 2012 to carry out exploratory drilling and also completed geological mapping for the entire allotted coal block.

iv. To demarcate the concession area and locate the proposed exploratory boreholes, surveyors from CMPDI were engaged in Nov–Dec 2012. Major part of the work has since been completed.

B. Global expression of interest inviting proposals related to acquisition of overseas coal assets

Pursuant to the Govt. of India's guidelines to acquire raw material assets abroad, a notice inviting proposals offering overseas coal assets to CIL was floated on 27th February, 2013. Number of proposals have been received and are being evaluated based on their marketing potential. 

13. Safety – always a Priority

Safety is always our highest priority. Embedded in our mission statement, it is one of the major deciding factors in our overall business strategy. We have framed a well–defined policy to ensure safety in our mines. We meticulously plan and design all our operations, systems and processes, with due regard to safety to achieve targeted coal production. We endeavour to inculcate the best operational and safety practices. We encourage Participative Safety Management to promote a proactive safety culture and to improve awareness at every level. We have identified hazards and associated risks in every mining operation and have prepared safety management plan for every mine. Annual Safety Plan for each and every mine is also prepared at the beginning of each calendar year to assess safety in mining operations to be carried out in that year. We have also established multi–level monitoring mechanism to implement the Safety Policy.

Over the years, the safety standards of our mines have significantly improved due to sincere and collective commitment shown by the management and the workers. Relentless safety awareness drives help impart advanced and continuous training. These drives use the best technologies in the field of mining methods and strong oversight. Required assistance and support from several quarters are also contributed to this achievement. All these factors have helped to reduce serious accidents to a record low in 2012. We are not complacent and are continuing our efforts to ensure better safety in every sphere of our activities.

To improve safety standards, we initiated several measures in 2012–13. Along with on–going safety activities and initiatives, we also ensured that our operations comply to the statutory requirements. 

14. Improving the condition of contractor's workers

During this year, wages and social security of contractors workers were jointly deliberated and finalised, based on the recommendations of High Powered Committee consisting of the representatives of Central Trade Unions. This Committee was constituted in accordance with the decision taken in the meeting with Central Trade Unions held on 16.04.2010, in presence of then Hon'ble Minister of State (I/C) & SPI and in pursuant to the letter dated 28.03.2010 of Ministry of Coal.

The basic rate of wages of different categories of contractors' workers engaged in mining activities are as under w.e.f 01/01/2013 

Employee categories: Basic rate (per day) 

Unskilled: Rs. 464.00 

Semi–skilled/Unskilled supervisory: Rs. 494.00 

Skilled: Rs. 524.00 

Highly skilled: Rs. 554.00 

15. CIL's R&R Policy, 2012

CIL recognises that its business activities have direct and indirect impact on the society, in which it operates. Therefore, as a sound business practice, it properly considers the interests of all its stakeholders, including the people affected by the project. In line with the above, we reviewed the earlier R&R Policy–2008 and revised the Resettlement & Rehabilitation Policy– 2012, which has been approved by the CIL Board in March, 2012.

The revised R&R Policy of CIL– 2012 has provided multiple options to the land losers. It also bestows more flexibility to the Board of Subsidiary Companies to meet unique R&R problems to acquire land faster.

16. Corporate Social Responsibility

Corporate Social Responsibility (CSR) lies at the core of all our operations. We have a well–defined CSR Policy which was introduced in June 2010. These policies were based on the guidelines issued by the Department of Public Enterprises for Central PSUs in April 2010. The same guidelines are also applicable to our subsidiary companies.

Our CSR activities mainly encompass the poor and the needy living in and around the project site and the HQs (within a radius of 25 Kms). Further, we also conduct CSR activities beyond mining areas, within the respective states with the due approval. CIL, being a holding company, executes CSR activities, which are beyond the jurisdiction of the subsidiary companies.

During 2012–13, we allocated Rs. 595.74 Crores (includes spill over amount) to undertake CSR activities at CIL and its subsidiaries.

We adopted CSR as a strategic tool for sustainable growth. In the present context, apart from investing funds for social activities, CSR at CIL also includes integrating business process with social ways.

17. Green initiatives

We are committed to follow all the environmental regulations and take necessary measures to mitigate the impact of mining and associated activities. We shall undertake the measures in a phased manner according to EIA/EMP of each project. We plant numerous trees every year. During 2012–13, we planted 15.86 lakh saplings.

Degraded land of opencast mines are restored by technical reclamation, followed by its biological reclamation. We have been monitoring reclamation work of 50 of our major OCPs, producing more than 5 Million Cubic metres (Coal+OB) every year and other OCPs once in three years through state–of–the–art technology of satellite surveillance. The satellite images reveal that land reclamation area increased by 5.27 Sq KM in 2012 in the 50 OCPs. We have undertaken initiatives in five subsidiaries to convert the reclaimed land into a cultivatable land with the help of agricultural universities.

We have initiated steps to install solar energy generation units on the rooftops of non–residential and residential buildings. These units are going to be connected to the grid. The objective is to conserve non–renewable energy resources and promote renewable energy.

18. Corporate governance

CIL complied with the conditions of Corporate Governance, as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by the Department of Public Enterprises, Government of India. It also complied with the conditions of Corporate Governance, as provided in Clause 49 of the Listing Agreement with the Stock Exchanges. As required under the said guidelines and provisions, a separate section on Corporate Governance has been added to the Directors' Report and a Certificate regarding compliance of conditions of Corporate Governance has been obtained from a Practicing Company Secretary.

As a proactive measure, CIL has conducted Secretarial Audit for 2012–13 by a Practicing Company Secretary.

19. Expectation

I am confident that CIL shall continue to move to achieve greater heights in future, meet the expectations of the stakeholders as well as the nation at large with the dedicated performance at all levels.

20. Acknowledgement

On behalf of your Company's Board of Directors, I wish to convey deep gratitude to you, our valued shareholders, for your continued support and trust. This motivates us to excel in all our pursuits and constantly create value for you as well as for the nation.

I appreciate the unstinted support and valuable guidance received from the Ministry of Coal, Government of India. I also express my sincere thanks to other Central Government Ministries and Departments, State Governments, all Employees, Trade Unions, consumers and suppliers for their relentless co–operation. 

S. Narsing Rao 


Place: Kolkata

Dated: 15th July' 2013

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