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Chairman's Speech (Coal India) Year : Mar '13
Friends,
 
 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 countrys energy mix. It contributes over 50% of
 Indias total primary energy production. The mineral is expected to
 continue playing a crucial role in meeting Indias 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. Indias coal industry shall continue its dominance as the
 primary source of energy for most part of the 21st century.
 
 Indias 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 MDOs
 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 Honble 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 Indias 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 contractors 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 Honble 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
 
 15.  CILs 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 Companys 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.
 
 Kolkata                                         S. Narsing Rao
 
 Dated : 15th July 2013                             Chairman
Source : Dion Global Solutions Limited
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