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« Mar 13
Chairman's Speech (Coal India) Year : Mar '14
Friends,
 
 I am delighted to welcome you to 40th Annual General Meeting of Coal
 India Limited (CIL). The Directors'' Report and the Audited Accounts for
 the year ended 31st March, 2014 together with the report of the
 Statutory Auditors and the report and review of Comptroller & Auditor
 General of India are already with you.
 
 1.  Importance of coal
 
 Coal provides around 30% of the global primary energy needs and
 generates 40% of the world''s electricity. It is currently the world''s
 second largest source of primary energy and is widely expected to
 replace oil as the world''s largest source of primary energy within a
 few years. (Source: BP Statistical Review of World Energy 2011 & World
 Energy Resources 2013 Survey). In the Indian context, the importance of
 coal scales up even higher. More than 54.5% of the primary commercial
 energy requirements in the country are met by coal and around 72% of
 the entire power generated in the country is coal based. In fact, coal
 fired power generation in our country has been increasing progressively
 over the years, with a sudden upsurge happening two years ago. During
 2013-14, coal based power generation increased in the country by 8.3%
 on a year-on-year basis.
 
 Recently, International Energy Agency (IEA) has reported that ''coal is
 here to stay for a long time to come''. Coal demand will grow at an
 average rate of 2.3% per year through 2018, Medium Term Coal Market
 Report (2013) of IEA, states. Coal demand is forecast to stay buoyant
 over the next five years. India and countries in Southeast Asia are
 increasing coal consumption.
 
 In the Indian context, coal is irreplaceable as the primary energy fuel
 in the foreseeable future. This is due to abundant coal reserves and
 its affordability. Coal India produces around 82% of the country''s
 total coal production is at the vanguard of the important fuel
 industry. The crucial need is to make conditions conducive for the
 growth of this important sector.
 
 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 needed to be
 undertaken included:
 
 - Enhancing drilling for coal exploration,
 
 - Fast-tracking land acquisition and R&R issues,
 
 - Avoiding delays in obtaining environmental and forestry clearances,
 
 - Timely completion of 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 exploration,
 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
 
 Our dream and our vision is to see that at the earliest there is no
 shortage of coal in the country and to make the country self reliant in
 coal. Not an easy task I agree, but unless one dreams big, greater
 dreams cannot be fulfilled, and, we are laying a strong foundation for
 that.
 
 We expect to live upto the social, economic, environmental and ethical
 responsibilities bestowed upon us by the policy makers of this nation
 that Coal India should support the country in its energy security. Our
 commitment and
 
 vision is that the coal demand should be fully met by the indigenous
 coal sources and that the lead role should continue to be played by
 Coal India.
 
 To turn this vision into a reality, we have adopted a workable
 approach. Meeting production targets and ramping up production are an
 imperative need through efficiency in operations. There are 148 ongoing
 projects during the current plan period with a production potential of
 about 484 Mtpa. 126 future projects with a total envisaged production
 capacity of about 441 Mtpa are expected to contribute 88 MTs by the
 terminal year 2016. Hopefully, our endeavours to ease the bottlenecks,
 that have impeded the growth momentum in the past, would fructify in
 the future years. Our new R&R policy has been made more fl exible and
 PAP friendly, which will help us in acquiring land expeditiously. This
 would see more coal projects opening up and help in enhancing the
 production levels.  Coal India is also planning to raise production in
 abandoned UG mines with increased mechanization. CIL''s efforts in
 acquiring mines abroad are also another step in shoring up the
 country''s coal needs.
 
 The company also envisages to produce in an optimistic scenario, 615
 MTs of coal by the terminal year of XII Five Year Plan (2016-17). To
 ease the coal supply bottlenecks, CIL is planning to initiate and
 develop infrastructure facilities like speeding up the process of
 laying railway tracks, especially in those areas where large coal
 reserves can be tapped. Development of sidings is another thrust area.
 This would help in increased coal supplies. Coal crushing capacity is
 also being increased.
 
 3.  Activities
 
 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 and also to third-party clients
 for coal exploration, mining, processing and related activities.  We
 have also established a wholly owned subsidiary in Mozambique viz Coal
 India Africana Limitada (CIAL), to pursue coal mining opportunities in
 that 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.  Accomplishments 2013-14
 
 Coal India Limited, amidst constraints and adversities, ended the
 fiscal 2013-14 with an incremental production of 10.211 Million Tonnes
 (MTs) and an incremental coal off-take of 6.4 MTs on a year-on-year
 comparison. Our company also met around 86% of its supply under FSA
 commitments to power utilities including 99% of committed quantity to
 NTPC. Even at this level, most of the coal fired power utilities were
 stocked with adequate coal. The company concluded the fiscal with a
 total production and off-take of 462.42 MT and 471.58 MT respectively.
 
 Our performance during FY 2014 was beleaguered by a string of issues,
 many of them extraneous in nature. Primary among them were statutory
 clearances that blunted our production. Coupled with that, climatic
 conditions in the form of heavy monsoon, post seasonal rains in October
 and a cyclone that battered coalfields together with the law and order
 problems in CCL & MCL crippled our production and transportation to a
 considerable extent. These issues are not being fl agged off as mere
 excuses for trailing behind the target, but they persistently plagued
 us.
 
 The dispatch to Power sector was 353.83 MT against a target of 376.18
 MT i.e. a growth of 2.4% and could have been higher but for the
 restrictions of intake of coal by some power stations due to
 availability of high coal stocks at the plant end. The stock level at
 Power stations as on 31.3.2014 were sufficient for 14 days consumption
 and stood at an aggregate level of 20.29 MT of which 18.82 MT was
 indigenous coal.
 
 During 2013-14, CIL and its subsidiaries achieved a Profit Before Tax
 (PBT) of Rs. 22879.54 crores and a Profit After Tax (PAT) of Rs. 15111.67
 crores. CIL and its subsidiaries paid/adjusted Rs. 19713.52 crores
 towards Royalty, Cess, Sales Tax and other levies.
 
 Recently, CIL was hailed in the media as ''the Jewel in the government''s
 PSU Crown'', a cash rich company that ''comes to government rescue'' and
 ''Coal India''s special dividend payout to boost Govt coffers''. This was
 stated in the context of CIL declaring the highest interim dividend for
 2013-14. On 14th January''2014 CIL Board approved payment of Interim
 Dividend of Rs. 29/- per share of face value of Rs. 10/- each i.e. 290% for
 the year 2013-14.  This was the highest ever Interim Dividend declared
 by the company. The total out-go from the company was Rs. 18,317.46 crore
 out of which Government of India which held 90% (at that time) of
 company''s shares received Rs. 16,485.71 crores. In addition, Govt. of
 India also got dividend distribution tax of Rs. 3,113.05 crores from CIL
 and its subsidiaries, thus making the total outfl ow to the government
 Rs. 19,598.76 Crores. This was, probably, the highest payout by any PSU
 in the country.
 
 5.  Public-Private Partnership (PPP) in Coal Mining
 
 In consonance to the policy of GoI & furthering the production
 capabilities of CIL, it has now been decided to work some of the mines
 of CIL through PPP mode. The Model Contract Agreement (MCA) is in the
 final stage of approval by CIL Board of Directors.
 
 Under this concept, the Mine Operator shall develop and operate the
 mine. The contract will be for 15 years initially and the operators
 shall carry out all the activities as per the approved Project Report
 (PR) of the block.
 
 6.  Accelerate the power generation from new power plants
 
 Considering the likely commissioning of new power plants till the end
 of March, 2015, the Government of India issued a fresh Presidential
 Directive on 17th July''2013, wherein the list of identified power
 projects with whom FSAs are to be signed was increased from 60,000MW to
 78,555 MW capacity. While the Government has directed CIL to sign FSAs
 on achieving stipulated milestones by the power units, in consonance
 with the earlier Presidential Directive issued on 4th April, 2012, the
 supply of coal would be attuned to the available long-term Power
 Purchase Agreement (PPA) with the DISCOMs directly or with Power
 Trading Companies having back to back agreements with the DISCOMs.
 However, taking into consideration the limited availability of
 indigenous coal, apart from reducing the minimum supply liability of
 indigenous coal to levels ranging from 65% to 75% of the year wise
 Annual Contracted Quantity (ACQ) for the years 2013-17, the
 Presidential Directive also provisioned scope of review of FSA in
 respect of minimum level of supply of indigenous coal once the actual
 supply liability touched 60,000MW. Till 31st March, 2014, 160 units of
 72,575MW capacity have signed FSAs. Out of these FSAs, 56937MW capacity
 involving a quantity of 221.64 Mty is backed by long-term PPA.
 
 7.  Initiative for overcoming logistic bottleneck
 
 Apart from mandatory offering upto 5% of the Annual Contracted Quantity
 of coal through Road or through Road- cum-Rail (R-C-R) mode in three
 coal companies, viz. CCL, SECL and MCL having specific railway
 connectivity constraints, coal is also offered on ''as is where is''
 basis to power consumers under FSA, wherein purchasers are deploying
 their own logistics at the stock points for lifting of coal.
 
 8.  Introduction of Third Party sampling and analysis system
 
 CIL introduced ''Third Party'' sampling and analysis system in place of
 the existing ''Joint ''sampling and analysis'' system to improve
 transparency in the process of coal sampling and analysis with effect
 from 1st October 2013.
 
 9.  Growth prof le
 
 Ongoing Projects: As on date, CIL has 148 on-going projects costing Rs. 2
 Crores and above, which are under different stages of implementation.
 The ultimate capacity of these projects is 484.06 Mty with a sanctioned
 capital outlay of Rs. 39,821.50 Crores.
 
 During 2013-14, 74 ongoing projects have contributed 239.97 MT and the
 envisaged contribution from 134 ongoing projects during the terminal
 year of XII Plan i.e. 2016-17 is 335.93 MT.
 
 Out of these 148 ongoing projects, 95 projects have both forestry and
 environmental clearances. Environmental clearances are awaited for 4
 projects, forestry clearances are awaited for 27 projects and for the
 balance 22 projects, both, forestry and environmental clearances are
 awaited.
 
 Future Projects: A total of 126 projects with an estimated capacity of
 440.99 Mty have been identified to be taken up during XII Plan period.
 Out of these future projects, 60 projects are envisaged to contribute
 about 88 MT during the terminal year of XII Plan i.e. 2016-17. Further,
 out of these 126 identified projects, PRs for 92 projects
 
 have already been formulated & submitted. So far 11 projects, having an
 ultimate capacity of 80.52 Mty with an investment of Rs. 11,800.83 crores
 have been sanctioned during the XII plan period.
 
 10.  Forestry and environmental clearances Forestry Clearance:
 
 During the XII Plan period, Stage II clearance for 11 forestry
 proposals involving an area of 923.73 Ha, has been approved by MoEF
 upto Mar-2014.
 
 At present, 192 forestry proposals are awaiting clearances at various
 levels. Out of these, 131 proposals involving an area of about 16624 Ha
 are awaiting clearances at Stage-I level and 61 proposals, involving an
 area of about 15368 Ha are awaiting clearances at Stage-II level.
 
 Environmental Clearance:
 
 48 environmental clearance proposals for a capacity of 71.54 Mty have
 been approved by MoEF during the XII Plan upto Mar-2014.
 
 11.  Other strategies
 
 To augment the underground production, semi-mechanised Board 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
 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 Powered 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 the shift hours. This is expected to increase
 productivity and reduce the arduous travelling time of the personnel in
 the underground mines.
 
 12.  Coal benef ciation
 
 At present CIL operates 17 coal washeries with a total capacity of 39.4
 Mty. Out of these, 13 are coking coal washeries with a total capacity
 of 24.90 Mty, while 4 are non-coking coal washeries with a total
 capacity of 14.50 Mty.
 
 CIL has initiated action through global tenders to establish 16 coal
 washeries with an aggregate capacity of 100.6 Mty, out of which 6 are
 coking coal washeries with a total capacity of 18.6 Mty and 10
 non-coking coal washeries with a capacity of 82.0 Mty. Construction
 jobs of three washeries are in progress and the same for two washeries
 have been awarded. Jobs of other washeries are in different stages of
 evaluation.
 
 13.  Foreign venture initiatives-Activities of CIAL, Mozambique.
 
 Coal India Africana Limitada (CIAL), a wholly owned subsidiary of CIL
 in Mozambique undertook exploratory activities, which are as follows: -
 
 i. Around 35,000 m of drilling has been carried out in the two coal
 blocks during the financial year 2013-14 and the progressive drilling
 is about 40,000 m.
 
 ii. Around 15,000 m of geo-physical logging has been carried out during
 the year 2013-14.
 
 iii. Coal samples are being analyzed at CMPDIL & CSIR Labs in India.
 
 iv. A Geological Report is under preparation based on the outcome of
 the exploration programme carried out so far.
 
 14.  Safety – always a priority
 
 Safety is always our highest priority. Safety is embedded in our
 mission statement and is one of the most important factors in our
 overall business strategy. We have framed a well defined safety policy
 to ensure safety in all our mines and establishments. We have already
 established a multi-disciplinary internal safety organization in all
 our
 
 subsidiaries for the implementation of our Safety Policy. All our
 operations, systems and processes are meticulously planned and designed
 with due regard to safety, conservation, sustainable development and
 clean environment.  Our best endeavours are for inculcating Safe
 Operating Procedures (SOP) and best safety practices to eliminate all
 types of work place injuries and occupational hazards. We have
 identified work place hazards and associated risks in each mining
 operation and prepared a risk assessment based on safety management
 plan for every mine.  We always encourage employees'' participations at
 all levels so as to promote a proactive safety culture and to improve
 safety awareness at the grass root level.
 
 Over the years, the safety standard of our mines have improved
 significantly due to genuine commitment and collective efforts of our
 employees, continuous and sustainable safety awareness drives,
 imparting the best on-the- job and skill-oriented training to our
 employees and using the state-of-the-art technology for improving
 standard of safety. As a result of these sustained endeavours, the
 numbers of serious injuries in the year 2013 have reduced to the lowest
 level since the inception of our company in 1975. However, we are not
 complacent and our sincere efforts are aimed at providing safety in all
 spheres of our activities.
 
 15.  Rationalization of Manpower
 
 During the year, Special Female Voluntary Retirement Scheme has been
 introduced to optimise manpower utilization by reducing non-technical,
 non-executive female employees by appointment of their sons on jobs
 where there is a requirement, without increasing the overall manpower.
 
 16.  Corporate Social Responsibility
 
 Corporate Social Responsibility (CSR) is a company''s commitment to
 operate in an economically, socially and environmentally sustainable
 manner, while recognizing the interests of its stakeholders. Our CSR
 activities have made an impact on protection and improving ecology,
 commitment towards improving the quality of life of the local community
 as well as the society at large through activities like Community
 Development, Resettlement & Rehabilitation maintaining ecological
 balance etc.
 
 During 2013-14, the CSR budget provision was Rs. 142.16 crores and
 expenditure was Rs. 141.70 crores for CIL, HQ.  CIL and its Subsidiaries
 have spent Rs. 409.37 crores towards CSR activities during 2013-14. CIL
 has prepared a revised CSR Policy to comply with the Companies Act 2013
 and the same is approved by CIL Board.
 
 1 7.  Green initiatives
 
 As a responsible corporate citizen, it has always been the endeavour of
 CIL to conserve our ecosystem by taking appropriate measures to
 mitigate the impact of mining and associated activities in accordance
 with EIA / EMP of each project.
 
 We appreciate the need for reclamation and restoration of the mined out
 land. We have created a green wealth of about 81 million plants
 including 13.36 lakhs saplings planted during 2013-14. Satellite
 surveillance has been adopted for monitoring reclamation activities of
 50 major OCPs, producing 5.0MM3 (Coal   OB) or more every year and
 other OCPs once in three years. It is evident from satellite
 surveillance that reclaimed land area has increased by 4.53 sq.Km
 during 2013 in 50 major OCPs.
 
 Study of National Remote Sensing Centre (NRSC), ISRO, Hyderabad in 2013
 reveals that the fire area in Jharia Coalfields had reduced from 8.9 sq
 km (as assessed in Master Plan) to 2.0 sq Km after undertaking various
 methods while implementing the Master Plan.
 
 As a green initiative during 2013-14, CIL has installed two solar power
 generating projects of 2.0MW and 0.25 MW capacities in its two
 subsidiary companies.
 
 Besides, various energy conservation methods have also been implemented
 in our projects. 6 rain water harvesting structures have been installed
 during 2013-14 to recharge the groundwater strata and conserve rain
 water effectively.
 
 CIL is implementing globally recognized Integrated Management System
 conforming to the requirements of ISO 9001, ISO 14001 and ISO 18001
 (OHSAS) Certifications.
 
 Till 31-03-2014, two subsidiaries namely NCL & MCL are ISO 9001, ISO
 14001 & ISO18001 (OHSAS) certified Another Subsidiary, CMPDIL and other
 62 units are also ISO 9001 certified. In addition accreditations were
 obtained by 73 units for ISO 14001 & 28 units of ISO 18001
 
 CIL has planned for obtaining Certificates for the balance units /
 projects of all subsidiaries to become an ISO 9001 SO 14001 an OHSAS
 18001 certified company, by the end of 2015-16.
 
 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 ndia and Clause 49 of the Listing Agreement with the
 Stock Exchanges except for appointment of 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.
 
 As a proactive measure, CIL has conducted Secretarial Audit for 2013-14
 by a Practising Company Secretary
 
 19.  Expectation
 
 In the recently signed Memorandum of Understanding (MoU) for 2014-15
 with the Government of India, Coal production and Off-take targets for
 FY 2015, have been set at 512 MTs and 525 MTs for ''Excellent'' rating.
 The company is gearing up to meet these challenging targets to the best
 our mites. With new and expansion projects expected to contribute
 during the year, our optimistic endeavour is to meet the targets.
 
 Project Management & Implementation, Technology, Quality and Customer
 Satisfaction, Initiatives of Growth have been identified as major
 thrust areas under MoU. These shall remain the company''s guiding
 factors in its quest for ncreased production and offtake.
 
 20.  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 relentless
 co-operation.
 
 Kolkata                                                A.K. Dubey
 
 Dated: 17th July, 2014.                                  Chairman
 
Source : Dion Global Solutions Limited
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