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Coal India

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Chairman's Speech (Coal India) Year : Mar '16
Dear Friends,
 I am delighted to welcome you to the 42nd Annual General Meeting of
 Coal India Limited. The Directors'' Report and the Financial Statement
 for the year ended 31st March, 2016 together with the Report of
 Statutory Auditors and report of Comptroller & Auditor General of India
 are already with you.
 1.  Importance of coal and Coal India Limited
 As our country is expanding industrially and economically so are its
 energy needs. In India, coal is the answer to escalating energy demand.
 The country''s planners, however, are alternately exploring to shift
 from being a largely fossil driven energy economy to one that is
 powered by clean and renewable form, especially solar. But till such
 time other forms of energy begin to contribute significantly, coal is
 and shall remain the most dominant energy fuel in providing energy
 security to the country. What makes coal such a preferred energy fuel
 is its abundance, availability and affordability. The estimated
 geological resource of Indian coal stood at 306.59 Billion Tonnes as of
 1st April, 2015. Around 72% of the entire power generated in the
 country is coal based.
 Against this backdrop, you will be proud to know that your company,
 Coal India Limited spearheads the country''s coal production, and
 produces over 84% of the country''s entire coal output. It is Coal India
 which virtually fuels and empowers the power sector in the country.
 2.  Accomplishments during FY2015-16
 For the first time, Coal India''s production and off-take have exceeded
 Half-a-Billion Tonne mark, an indication that the Company is on its
 pursuit of 1 Billion Tonne production by 2019-20.
 During FY 2016 Coal India as a whole recorded coal production of 538.75
 Million Tonnes (MTs). You will be pleased to know that the Company has
 stepped into a higher growth trajectory registering nearly 44.51 MTs
 increase in coal production during FY 2016 - the highest ever
 incremental increase in a single financial year since the inception of
 the Company.
 Raw coal off-take during FY2016 was 534.50 MTs, an increase of 45.11
 MTs on a year-on-year comparison. As in production, all subsidiary
 companies of Coal India have registered positive growth in off-take.
 Power Utilities of the country, the major coal consuming sector, during
 FY 2016 were supplied with 408.75 MTs of coal against 385.39 MTs in
 previous fiscal, registering a growth of 6.1% and achieving 95% of the
 target. Coal supplies to NTPC (Including the NTPC JV) registered a
 materialization level of 90%.
 Other positives:
 1) On the financial front, you will be pleased to know that, Coal India
 for the first time had surpassed the magical figure of Rs. 1 Lakh
 Crores in Gross Sales recording Gross Sales of Rs. 1,08,150.03 Crores
 during 2015-16.
 2) Not a single power-utility was in a critical or super- critical
 condition for want of coal.
 3) Due to the improved despatch and better quality of coal, there was a
 marked decline in import of non- coking coal of 17.7 MT during FY2016,
 resulting in substantial saving in foreign exchange.
 4) Significantly the Over Burden Removal (OBR), an important
 performance criterion in exposing coal seam for future mining, took a
 quantum leap during FY2016 registering a steep growth of 29.60%. This
 is more than three-fold increase on a year-on-year comparison. OBR also
 improves the mine geometry and makes mines safer to operate. Coal India
 had surpassed the target of 1031 Million Cubic Metres, in OBR, more
 than a month ahead of the closure of the fiscal on 24th February 2016
 itself achieving an actual of 1148.908 Million Cubic Metres which is
 111% of target satisfaction.
 5) You may be happy to note that contrary to the popularly held
 convention that coal mine areas are the places to keep away from,
 Western Coalfields Limited, a subsidiary of Coal India Limited started
 an eco-friendly mine tourism which has become highly popular. The
 Hon''ble Prime Minister of India in his ''Mann Ki Baat'' programme aired
 on 27th March, 2016 made a special mention of this.
 Financial Performance:
 Coal India is one the highest contributors to the government ex-chequer
 in the country  federal and state governments.  Coal India paid a
 corporate tax of Rs. 7,012.35 Crores to Government of India in FY2016.
 Coal India and its subsidiaries have also paid/adjusted Rs. 29,084.11
 Crores towards Royalty, Cess, VAT and other levies.
 During 2015-16, Coal India as a whole earned pre-tax profit of Rs.
 21,589.09 Crores and a Profit After Tax of Rs. 14,274.33 Crores.
 Coal India had paid an interim dividend of Rs. 27.40 per share. The
 total outgo from the Company was Rs. 17,306.84 Crores of which
 Government of India holding 79.649% of company''s shares received Rs.
 13,784.86 Crores.
 3.  Strategies for Growth
 Coal India is faced with meeting challenging targets in the years
 ahead. Going forward, in order to meet the production targets, Coal
 India needs to step up to a double digit growth rate from that of
 around 9% achieved during FY 2016. It is with a feeling of
 satisfaction, I share with you that during the first four months of FY
 2017, Coal India''s production growth was more than 6 million tonnes
 over the same period last year.
 To sustain the growth momentum in its production and off- take in the
 future, Coal India has formulated the following multi-pronged
 (i) Critical Railway Links - Collaboration with State Governments &
 There are a few important coalfields in the country which have huge
 production potential but are without rail linkages for evacuation of
 coal produced. Among these, 3 rail lines linked to CCL (Jharkhand), MCL
 (Odisha) and SECL (Chhattisgarh) are critical and expected to play a
 key role in the evacuation of coal.
 For speedy commissioning and implementation of these critical rail
 lines, Joint Venture companies have been formed in a tripartite
 partnership arrangement between State Nodal Agencies, respective CIL
 subsidiary companies and IRCON synergizing the efforts.
 (ii) Technology Development
 A.  Geology
 In geological exploration, hydrostatic drilling is the most
 state-of-the art technology. CMPDIL has deployed twelve hydrostatic
 drills for exploration of coal by replacing the conventional mechanical
 drills. We plan to procure seven more hydrostatic drills in 2016-17.
 These drills are high-tech and improves efficiency of operation
 significantly to achieve higher productivity.
 In 2015-16, the tungsten carbide inserts of Crab Bits were replaced
 with PCD inserts which enabled higher penetration rate and bit life in
 Motur formation of WCL. To improve boreholes stability, mud mixer
 assembly will be introduced within the hydraulic system of mechanical
 drills for continuous mixing of drilling fluid.
 Phenomenal development of technology applied in Geophysical Survey has
 also been taken place. In 2015-16, five Geophysical Loggers were
 available. It is planned to expand the application of Geophysical
 Logging by increasing the strength to ten by 2016-17. This equipment is
 used for delineation of different formations and in-situ
 characteristics in a borehole at different depth.
 Five Resistivity Imaging System were introduced in 2015-16. In 2016-17,
 one more will be procured for sub-surface geological investigation.
 We proposed to introduce a new technology by utilizing Ground Probing
 Radar system (GPR) for shallow depth investigation with high precision.
 It is also intended to introduce Gravity Survey equipment for high
 depth basement studies of coalfields. Further, it is planned to replace
 manual hammering technique with high power electro- mechanical
 vibrating source for generating acoustic wave (e.g. Vibroseis) for
 greater depth of geological investigation in 2D/3D Seismic Survey.
 B.  Opencast Mining
 The latest version of Geovia Minex Software has been put to use which
 facilitates state-of-the- art resource planning through pit design, pit
 optimization, scheduling of resources and dumps etc.
 Laser Scanners as TLS (Terrestrial Laser Scanner) for measurement of
 overburden and mine face, that are in use, entails significantly higher
 accuracy levels and speed. Further, it is also proposed to use drones
 with laser scanner for survey purpose.
 A wide variance of HEMM size have been provisioned in coal mining
 projects. Higher size HEMM viz. Electric Rope Shovels of 42 Cum
 together with Dump Trucks of 240 T have been introduced in CIL mines.
 Surface Miners of varying sizes are being used & proposed for new
 mines, wherever suitable. Dozers fitted with rippers are also being
 proposed for band and thin seam removal in many of the projects. For
 better management and control of HEMM fleet, GPS based truck dispatch
 system has been introduced in large OC mines.
 The use of silos with rapid loading system in large mines have been
 stepped up for faster and environment friendly loading in the sidings.
 GPS and GPRS technology are used for vehicle tracking system for better
 C.  Underground Technology
 In underground mines, persistent efforts are being made to embark upon
 the use of mass production technologies, wherever the geo- technical
 conditions permit. During the year 2015- 16, a power support long-wall
 set having planned production capacity of 0.7 Mty has been installed in
 Moonidih XVI seam and another long-wall set for Jhanjra mine (having
 planned production capacity of 1.7 Mty) is under installation. The
 long-wall set at Moonidih commenced operation during the year.
 Four continuous miners have been added and put into operation during
 the year in three more mines of CIL with total planned capacity of 1.84
 Mty. Deployment of more numbers of continuous miners are expected in
 the coming years to enable enhancement of production & productivity
 from underground mines.
 In 2015-16, the first ever diesel operated Free Steered Vehicle (FSV)
 has been introduced in Jhanjra mine of ECL for transportation of men
 and material. Additionally, eight (8) numbers of man- riding system has
 been installed in arduous and long distant mines of CIL which plays a
 significant role in enhancing safety and productivity in underground
 mines. It is envisaged to install more man riding systems in CIL mines
 in the near future.
 (iii) Role of HR
 Coal India is largely man-power intensive industry.  Human Resource has
 to play an active role if Coal India has to achieve the challenging
 targets of the future.  Coal India had identified various areas that
 would supplement its efforts in invigorating its manpower and is
 charting out a plan for recruiting multi-disciplinary professionals,
 skill upgradation of existing employees and identifying key areas of
 Coal India had also signed a Memorandum of Understanding with National
 Skill Development Corporation (NSDC) to promote special education and
 employment enhancing vocational skills. The beneficiaries would also
 include Project Affected Persons (PAPs).The objective is to promote
 special education and employment enhancing vocational skills especially
 among children, women, elderly, and the differently abled.
 4.  Other Improvement Areas
 (i) Coal Washing - A step towards Quality improvement
 At present, Coal India has a total coal washing capacity of 36.8
 million tonnes per year (MTY) through its 15 existing washeries, of
 which 12 are coking and 3 non coking with 23.30 MTY and 13.50 MTY
 capacities respectively.
 In addition, Coal India plans to set up further 15 washeries with
 state-of-the-art and innovative technologies in coal beneficiation with
 an aggregate throughput capacity of 112.6 MTY. Out of these, 6 are
 coking coal washeries, with a cumulative capacity of 18.6 MTY, and the
 rest 9 are non-coking coal washeries with a total capacity of 94 MTY.
 (ii) System Improvements
 Ease of doing business:E-procurement universalized and more effectively
 implemented. ERP as a route towards organisational synergy will also be
 fast tracked.
 Coal India has already adopted a host of ICT initiatives to make
 internal processes IT driven and to enhance all round system efficiency
 and transparency to improve employee, customer and vendors''
 - E-procurement of goods in CIL and its subsidiary companies is in
 operation of tender value above Rs. 2.00 lakhs since 2011.
 - The Reverse Auction has been implemented in CIL and its Subsidiaries
 from January, 2016 for tender value of Rs. 1.00 Crores and above.
 - In the tenders called for procurement of Explosives and Accessories
 through Reverse E-Auction savings for two years has been Rs. 588.54
 Crores in Bulk Loading Explosives and Cartridge Explosives &
 - Procurement of Imported HEMM on CIP basis has been introduced,
 thereby, the vendor has to supply the complete equipment along with
 spares at site and only thereafter the payment is being released.  This
 has put onus on the vendor for any loss/ damage in transit, as payment
 is made only after receipt of complete equipment in intact condition.
 - In case of supply of HEMM ordered by CIL, the vendors are responsible
 for making 85% availability and in case they fail to do so, penalty is
 applicable.  For any spares ordered along with the equipment and not
 consumed within the warranty/guarantee period of 4 years, the same are
 to be taken back by the vendors at the ordered rates.
 - Savings made in Procurement of HEMM (over LPP) through e- procurement
 has been Rs. 244.83 Crores in 850 HP Crawler Dozer (32), 460 HP Wheel
 Dozer (44) & 240 Te Dumpers (44).
 - Submission of Earnest Money Deposit (EMD) by various modes including
 electronic transfer and BG has been introduced.
 - Arrangements have been made for multi-bank refund system to
 unsuccessful bidders within 2 days of finalization of tender.
 - A bill tracking system has been introduced to facilitate the third
 party including vendors/suppliers/ consumers to track the status of
 processing and payment of their bills. Senior officers will monitor the
 pendency at different stages of processing the bills.
 - Coal India in a step towards consumer friendly approach and
 transparency in business operations had launched a Web Portal ''Coal
 Allocation and Monitoring System'' during FY2016 aimed for the benefit
 of Small & Medium Sector Consumers.  The web portal is for distribution
 of coal by State Nominated Agencies (SNA), which would provide small
 and medium consumers access to information about SNAs, availability,
 booking/supply distribution of coal in public domain.
 - Reaching out through an electronic platform, in a transparent,
 consumer friendly mechanism Coal India has rolled out linkage auction
 for non-regulated sector consumers like captive power plants (CPPs),
 cement plants, Sponge Iron Units, fertilizer, chemical and many other
 industrial units, not having linkages or whose Fuel Supply Agreements
 got expired. The benefits include option of choosing specific grade of
 coal, preferred source of supply, mode of transport etc. In a leap from
 the past, the non-regulated consumers would now be able to book 100% of
 their normative requirement through the bidding process instead of the
 earlier practice of around 75% of their normative requirement.
 - The linkage auction to CPPs proved to be hugely successful. As
 against the total offered quantity of 18.86 Million Tonnes the total
 booking was 96% of the quantity at 18.07 Million Tonnes.
 - In another step towards consumer friendly approach, quality of all
 supplies would be assured through Third Party Sampling through a
 government nominated agency.
 Coal India has put in place electronic surveillance initiatives to keep
 watch on its coal stock and to keep a track on movement of coal loaded
 vehicles. Major initiatives include:
 a) GPS/GPRS based VTS (Vehicle Tracking System) on coal transport
 b) OITDS (Operator Independent Truck Dispatch System).
 c) Installation of CCTV at vulnerable points like entry/ exit points,
 coal stock yards, railway sidings, material stores, explosive magazines
 and important offices.
 d) RFID based boom barriers.
 e) Wide Area Networking for connecting all the Mines, Projects,
 Sidings, Weigh Bridges and HQ through dedicated network for data
 transfer and Coalnet implementation.
 f) Installation of in-motion Weigh Bridges with RFID tags.
 g) Weigh Bridge connectivity for weight tracking.
 h) Geo-fencing of mine areas.
 Coal India is also adopting improved measurement system of coal and OB
 through 3D Terrestrial Laser Scanner System for greater accuracy. Other
 initiatives include project monitoring system, land management system,
 integrated business solutions, document digitization management and
 archival system, amongst others.
 For greater employee satisfaction, initiatives such as Grievance
 Management System, EIS (Executive Information System), Online filing of
 APR, Online PRIDE/ PAR (Performance Appraisal Report), Online Vigilance
 Clearance System, Online CPRMSE (Coal India Post- Retirement Medical
 Scheme for Executives) have been undertaken.
 5.  Green Initiatives
 Coal India is conscious of its commitment towards the environment and
 its ecosystem. The Company strives to give back to Nature, to the best
 extent possible, what has been pried away from her. The Company does
 this by taking appropriate measures to mitigate the impact of mining
 and associated activities in accordance with EIA / EMP of each project.
 Coal India has created a green wealth of about 92.35 million trees
 covering an area over 36,896.26 Ha till March 2016. Of this, 1.68
 million trees have been planted over 719 Hectares (Ha) in FY 2016.
 Satellite surveillance has been adopted for monitoring reclamation
 activities of 50 major OCPs, producing 5.0MM3 (Coal   OB) or more every
 year and for other OCPs once in three years. It is evident from
 satellite surveillance that reclaimed land area has increased by 9.63
 Sq.Km during FY2016 in 50 major OCPs w.r.t FY 2015.
 Study of National Remote Sensing Centre (NRSC), ISRO, Hyderabad in 2013
 revealed that the fire area in Jharia Coalfields had reduced from 8.9
 Sq. Km (as assessed in Master Plan) to 2.18 Sq. Km after undertaking
 various methods while implementing the Master Plan.
 6.  Safety  Always a Priority
 Safety of miners and mines remains a top priority concern for Coal
 India. In pursuit of higher production, no compromise would be made on
 safety front. Safety of miners and mines override any other priority.
 Coal India has a well-defined safety policy to ensure safety in all
 mines and establishments. There are many preventive measures against
 accidents and these are being followed attentively. Safety can be
 increased with improved training, skill development and approaching the
 issue in a scientific and holistic manner. So, safety personnel are
 exposed to the best practices internationally and are sent for training
 abroad. We are also inculcating and monitoring a safety culture and
 attitude. The fatality rate per million tonne of coal produced has
 reduced by 22.2% and serious injury rate per million tonne has reduced
 by 28.9% in 2015 compared to its previous year. The endeavour is to
 elevate safety standards radically further, since in this regard there
 could be only ''Zero Accident'' as the goal.
 7.  Corporate Social Responsibility
 Apart from improving the quality of lives of people, Coal India''s
 Corporate Social Responsibility initiatives also take them along
 towards the company''s goal by partnering with them. While pursuing the
 enhancement of Coal production, CSR is being undertaken for inclusive
 growth of villagers and the nearby affected communities.
 (i) During the year total expenditure on CSR in pursuance to Section
 135 of the Companies Act, 2013 was Rs. 1076.07 crore and further Rs.
 6.00 crore was towards donation to Nepal Earthquake relief fund
 totalling to Rs. 1082.07 crore as against Rs. 298.10 crore during FY
 (ii) Coal India has taken an initiative towards Swachh Vidyalay
 Abhiyaan by constructing 53,412 toilets.  A total of Rs. 820.44 Crores
 has been spent on the construction of these toilets by 31st March,
 (iii) In a tie-up with Tata Medical Centre (TMC), Coal India has
 sanctioned Rs. 41.11 Crores for the construction of Premashraya, a
 ten storied building which provides housing facilities for the
 economically weak and outstation patients visiting TMC for treatment.
 The facility is also extended to the relatives of the patients who
 accompany them. Apart from patient stay units, the building also has
 palliative care cubicles, child care centres, counselling rooms and
 physiotherapy facility.
 (iv) Coal India has executed different development works through The
 Energy and Resources Institute (TERI), New Delhi in 40 villages of the
 backward district of Purulia, West Bengal as identified by the Planning
 (v) Coal India has also funded -
 1.  Construction of Aquatic sports hostel at Kolkata at a cost of Rs.
 1.14 crores.
 2.  Traffic Department, Kolkata Police for conducting awareness
 programmes among school children towards road safety at a cost of Rs.
 69.85 Lakhs.
 3.  West Bengal Housing Infrastructure Development Corporation, Kolkata
 towards purchase of 3 electric buses and 1 small electric service
 maintenance vehicle at a cost of Rs. 5 crores.
 4.  Department of School Education, Govt. of West Bengal, for providing
 9,000 bicycles to girl students in the district of South 24 Parganas,
 North 24 Parganas and Nadia district West Bengal at a cost of Rs. 2.88
 8.  Corporate Governance
 Coal India 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 and Clause 49 of the Listing Agreement
 as well as Regulation 34(3) read with Schedule V of the SEBI (Listing
 Obligations and Disclosure Requirements) Regulations, 2015 with the
 Stock Exchanges except for appointment of two Independent Directors. As
 required under the said guidelines and provisions, a separate section
 on Corporate Governance has been added to Directors'' Report and a
 Certificate regarding compliance of conditions of Corporate Governance
 has been obtained from a Practising Company Secretary.
 Coal India has conducted Secretarial Audit for 2015-16, as required
 under Companies Act 2013 and the Secretarial Audit Report is enclosed
 as a part of Directors report.
 9.  Vision
 Coal India''s vision is to ensure that there is no shortage of coal in
 the country and to make the country self-reliant in coal. Coal India
 envisions to be a be commercially viable company and endeavours to move
 ahead as a modern, professional, consumer friendly and successful
 corporate entity committed to national developmental goals. The vision
 also extends to dedicate itself to the service of the countrymen in
 providing the primary commercial energy in an affordable and
 environmentally friendly manner. Coal India aims to be not only a
 valued company but a company with values through constantly innovating
 on ease of doing business.
 10.  Acknowledgement
 On behalf of your Company''s Board of Directors, I wish to convey my
 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.  appreciate
 the unstinted support and valuable guidance received from the Ministry
 of Coal, Government of India.  also express my sincere thanks to other
 Central Government Ministries and Departments, State Governments, all
 employees, Trade Unions, consumers and suppliers for their continuous
 Kolkata                                       Sutirtha Bhattacharya
 Dated: 9th August 2016                                     Chairman
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