Dear Shareholders
I have great pleasure in welcoming you to the 38th Annual General
Meeting of Coal India Limited. The report of Directors, Audited
Accounts for the year ended 31 st March, 2012 together with the report
of Statutory Auditors and report and review of Comptroller & Auditor
General of India are already with you.
Coal India Limited- A MAHARATNA COMPANY
On 11th April2011, Govt, of India conferred "Maharatna Status" to Coal
India Ltd. This is only the 5th PSU to have been conferred with such
status. The Maharatna status will provide greater financial autonomy to
expand its operations both domestically and globally. In four
yearstime from a normal profit making PSU, CIL attained the status of
Mini Ratna in March2007, Navaratna in October2008 and now Maharatna,
the highest status.
1. Importance of Coal
India is among the fastest growing economies in the world. Energy is
one of the major inputs for the economic development of any country. In
developing countries, the energy sector assumes a critical importance
in view of ever-increasing energy needs requiring huge investments to
meet them. Coal dominates the energy mix in India, contributing over
50% of the total primary energy production and is expected to continue
to be crucial to Indias future energy needs.
Coal India accounted for about 81% of total coal produced in India
during the fiscal 2012. There appears to be no dearth of market for
coal, if it can be produced at a reasonable cost on a sustainable
basis. Coal Industry in India shall continue its dominance as the
primary source of energy for most part of the 21 st century.
There is a huge demand for coal in the country. The demand of coal is
projected to increase to about 980.5 Mt by 2016-17, out of which
thermal coal demand constitutes about 90%. As against this demand,
indigenous coal availability is projected optimistically at 795 Mt.
This would call for addressing major production constraints in boosting
the production capacity viz. enhance drilling for coal exploration,
fast-tracking land acquisition and R&R issues, avoid delays in
obtaining environmental and forestry clearances, timely construction
and completion of infrastructural facilities for coal evacuation and
greater thrust on R&D activities in coal sector. Unless these issues
are resolved in a manner conducive to exploitation, extraction and
expansion of coal reserves, there will always be a gap in demand-supply
of coal and coal imports would be required to bridge the shortfall
2. Vision
The strategic vision of Coal India Limited 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 based on our raw
coal production of 435.84 million tonnes in the fiscal ended
March2012. Our coal production operations are primarily carried out
through seven of our wholly-owned subsidiaries in India. In addition,
another wholly owned subsidiary, CMPDIL, carries out exploration
activities for our subsidiaries and 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
Mozambique.CIL has core competence across the entire coal business
value chain starting from exploration, planning and design, operations,
beneficiation and marketing. The principal product of CIL is raw coal,
primarily non-coking. CIL is also looking for diversification
opportunities in the areas of Coal Bed Methane, Coal Gasification, Coal
Liquefaction and Power Generation.
4. Performance Highlights
There has been a growth in all major physical parameters during the
fiscal. Production of raw coal during 2011 -12 was 435.84 million
tonnes as against 431.32 million tonnes in 2010-11, a growth of 4.52
million tonnes over the last year. Off-take of raw coal was 433.08
million tonnes during 2011-12 compared to 424.50 million tonnes in
2010-11, a growth of 8.58 million tonnes over the last year. Overburden
removed during the year was 735.14 million cubic metres as against
732.13 million cubic metres in 2010-11 thereby recording a growth of
3.01 million cubic metres over the previous year.
CIL is one of the largest profit making, tax and dividend paying
enterprises. CIL and its subsidiaries have achieved an aggregate
pre-tax profit of Rs 21,272.66 crores in 2011-12 against a pre-tax
profit of Rs 16,463.24 crores in 2010-11 registering a growth of 29.21
o/o over earlier year.
Your Directors have recommended dividend payment of Rs 6,316.36 crores @
Rs 10/- per share on 6316364400 Equity Shares of Rs 10/- each fully paid
value at Rs 6,316.36 crores. Out of total dividend, Govt of India gets Rs
5,684.72 crores and other shareholders getRs631.64 crores.
5. Growth Profile
There are 147 on-going projects with an ultimate capacity of 437.08
Mty, in different stages of implementation. During the terminal year of
XI Plan i.e. 2011-12,85 ongoing projects have contributed 211.39 Mt and
100 ongoing projects, are planned to contribute 228.67 Mt during the 1
st year of XII Plan i.e. 2012-13 & 136 ongoing projects have been
planned to contribute 333.83 Mt during the terminal year of XII Plan
i.e. 2016-17. Out of 147 ongoing projects, 80 projects have required
forestry and environmental clearances, whereas environmental and
forestry clearances are awaited for 13 & 34 projects respectively and
for 20 projects both forestry and environmental clearances are awaited.
A total of 72 projects with an estimated capacity of 257.26 Mty have
been identified to be taken up during XII Plan period. In addition to
these projects, 59 identified XI Plan projects with an ultimate
estimated capacity of 156.59 Mty and 2 X Plan identified projects shall
also be taken up during XII Plan period. A total of 133 projects with
an estimated capacity of 420.85 Mty are being planned to be taken up
during XII Plan period. Out of these projects, 88 projects will
contribute about 86 Mt during the terminal year of XII Plan i.e.
2016-17.
6. Forestry & Environmental Clearances
A total of 179 forestry proposals are awaiting forestry clearances. Out
of these, 130 proposals are awaiting Stage-I and 49 proposals are
awaiting Stage-II forestry clearances. The total area involved is 15656
Ha at Stage-I level and 13115 Ha at Stage- II level. Out of 179
proposals, 45 proposals are awaiting approvals at MoEF level (26
stage-l proposals and 19 Stage-II proposals). 26 forestry proposals
awaiting clearance at MoEF Stage-I level are expected to contribute
around 25 Mt and 19 proposals awaiting clearance at MoEF Stage-II level
are expected to contribute around 69 Mt during the terminal year of XII
Plan i.e. 2016- 17.
57 environmental clearance proposals with an incremental capacity of
137 Mty are awaiting clearances at different levels. Out of these 57
proposals, 8 proposals with an incremental capacity of 14.44 Mt are
awaiting TOR approval, 3 proposals with an incremental capacity of
21.86 Mt are awaiting dates for EAC meeting and 29 proposals, with an
incremental capacity of 77.26 Mt are awaiting final clearance. Out of
these 57 proposals, 15 proposals require forestry clearance (Stage-I
level).
7. Other Strategies
For augmentation of underground production, manual mines are being
converted to semi-mechanised board & pillar mining with LHD (Load Haul
Dumper)/SDL(Side Discharge Loader) and fully mechanized mass production
technology with Continuous Miner (CM) and Power Support Long wall (PSLW)
faces in phases. UDMs (Universal Drilling Machines) are being deployed
to increase productivity of SDL/LHD mines as well as safety of the
workers in the mines. Man-Riding system is being installed to fully
utilize shift hours to increase productivity and ensuring safety of the
personnel. For reworking of some of the identified abandoned mines,
Company is in the process of formulating business model in line with
MDO (Mine Developer & Operator) concept.
8. Coal Beneficiation
In order to supply improved quality and sized coal, 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 and 5 are non
coking coal washeries with a total capacity of 17.22 Mty.
As a step towards reducing environmental pollution for a cleaner
environment, CIL has decided to supply washed coal mainly to non
pithead consumers initially. In this direction, action has been taken
to set up 20 coal washeries with a total throughput capacity of 111.1
Mty (6 coking coal-19.1 Mty & 14 non coking coal- 92 Mty) in the 1st
phase and tender for 4 washeries with a total capacity of 22.5 Mty has
been finalized. The washed coal will be supplied mainly to steel
plants, thermal power plants, cement plants, etc. Increase in use of
washed coal will not only help to reduce pollution level but also
result in saving transportation cost and improvement in steel/power
plant performance thus leading to economic gain. These washeries are
scheduled to be commissioned in XII Plan period.
CIL is also formulating plan to set up more coking and non coking coal
washeries in the 2nd phase for supply of washed coal to more number of
consumers. The search for state-of-art and innovative technologies in
the field of coal beneficiation is on and in this direction, some R&D
projects have been approved for implementation. The existing old
washeries are also undergoing renovation.
9. Turning Point in Coal Grading & Pricing
CIL has introduced GCV based grading & pricing of coal with effect from
1st January, 2012.This is a watershed in the commercial energy pricing
regime and in compliance of Governments order to switch over from the
traditional Useful Heat Value (UHV) based system of grading and pricing
of non-coking coal produced in the country to Gross Calorific Value
(GCV) based system, which is an internationally accepted practice.
10. Foreign Venture Initiatives
Coal India Limited being the leading energy supplier of the nation has
been entrusted with the responsibility of meeting the coal demand of
the nation, if required, even through imports. In this direction, CIL
has already acquired two coal blocks in Tete Province in Mozambique and
has registered its wholly owned subsidiary, Coal India Africana
Limitada (CIAL), in Mozambique for exploration and development of these
coal assets. CIAL has become fully operational since last year with
establishment of its office and posting of a multi-disciplinary team of
senior executives in city of Tete, Mozambqiue. The job of Environmental
Impact Assessment (EIA) and preparation of Environmental Management
Plan (EMP) for drilling stage has been taken up and the drilling
activities are expected to start in the next financial year. The
activities for acquisition of coal block in South Africa have been
initiated starting with execution of Memorandum of Understanding (MOU)
with Provincial Government of Limpopo for exploration and development
of coal blocks in Limpopo Province.
11. Safety-always a priority
Safety is always our highest priority. Safety is embedded in our
mission statement. All our operations and systems are so planned and
designed to eliminate or reduce mining hazards. Our endeavour for
achieving superior standards of safety and best operational practices
are continued. We encourage our employees representatives for joint
consultations on safety matters and secure their motivation and
commitment in safety management. We prepare annual Safety Plan at the
beginning of every calendar year, unit-wise and for the company as per
respective geo-mining needs. We have also established multi- level
monitoring mechanism for implementation of safety plan.
Over the years the safety standards of our mines have significantly
improved due to genuine commitment by the management, workers and
regulators collectively, through well thought out and conscientious
safety awareness drives, advanced and continuous training of our
workforce, technological advancement in the field of mining methods and
machineries, strong oversight with required assistance and support from
all quarters. In the last year, fatalities due to mine accidents have
reduced to the lowest level (52) since the inception of our company in
1975.
To improve the safety standard, we are continuously pursuing several
safety measures along with on-going safety activities and initiatives
apart from compliance of statutory requirements.
12. R&R Policy of CIL, 2012
Coal India Limited recognizes that its business activities have direct
and indirect impact on the society in which it operates. Therefore, as
a sound business practice it gives due consideration to the interests
of all its stakeholders including the project affected people. In line
with the above, Company reviewed the existing R&R Policy-2008 and a
revised Resettlement & Rehabilitation Policy- 2012 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 and more flexibility to the Board of Subsidiary
Companies to meet unique R&R problems in order to have faster land
acquisition.
13. Corporate Social Responsibility (CSR)
CIL believes in mining with a human face through a socially
sustainable inclusive development. It pursues a structured CSR policy
in and around the coal mining areas to improve quality of life with
community consensus and inclusive participation. CSR activities
include development of community infrastructure like school buildings,
community hall, village roads, wells, tube wells, school furniture as
well as Mahila Mandal Activities, Sports and Cultural activities,
Medical Camps etc.
We believe in cultivating a socially sustainable inclusive development
which can contribute to build the better sustainable community through
sound business activities and touching the lives of millions of people
positively by supporting environmental and health-care projects and
social, cultural and educational programmes. During 2011-12, an amount
of Rs. 553.33 Crores has been allocated for undertaking CSR activities
by the coal companies.
14. Steps towards Environment
We are committed to follow environmentally responsible practices and
adhere to the relevant environmental laws and regulations in all
aspects of our business from mining to marketing and striving for the
continued improvement of environmental conditions in and around our
operational areas. The company has adopted a Corporate Environmental
Policy, duly approved in 1995. Since then, due to changing environment
scenarios with promulgation of new environmental regulations/laws and
considering the new methodologies and new areas to be addressed, the
Environmental Policy (1995) has been improved and the revised
Environmental Policy has been approved by CIL Board in March 2012.
Measures are being taken to ensure that mining and associated
operations have minimum impact on the surrounding air quality, water
quality, noise level and soil quality, hydro-geology, land use pattern
and socio-economic profile of the nearby population. The mitigation
measures include dust suppression in mines through fixed and mobile
water sprinklers. Effluent treatment facilities for mine effluent,
workshop effluent and CHP effluent like oil & grease traps,
sedimentation ponds and facilities for storage of treated water and its
reuse have been provided for all the major projects. Domestic
wastewater treatment facilities have also been provided to deal with
the domestic effluent. The level of pollutants are being monitored on
routine basis to ascertain the efficacy of the pollution control
measures being taken in the projects. Additional remedial measures are
taken, if required, to keep the pollutant level within the limits
prescribed by regulatory bodies.
We are committed to restore the degraded land and the mined out areas
which are reclaimed both technically and biologically by grading, top
soiling and planting local species of plants. Since beginning, the
subsidiaries of CIL have planted around 76 million trees over an area
of around 33000 Ha. The plantation works are carried through concerned
State Forest Corporations. To have a more scientific approach, in BCCL
the work is being executed by Forest Research Institute, Dehradun on
experimental basis.
We have developed comprehensive mine reclamation and rehabilitation
strategies for each of our mines and the same is being implemented as
per the Environmental Management Plan approved by MoEF. Back filling of
mining voids by the overburden material, preservation of topsoil, its
storing and use during the plantation are the integrated part of the
mining operation cycle. Concurrent reclamation and rehabilitation of
mined out areas are taken for gainful land use, wherever feasible. The
land reclamation and rehabilitation operations are being monitored by
Satellite Surveillance. 50 major OCPs excavating more than 5 Mm3
(Coal+OB) per annum are being monitored every year while remaining OCPs
excavating less than 5 Mm3 (Coal+OB) per annum are being monitored
every 3rd year. This gives a clear picture of reclamation, which
otherwise is difficult to accurately estimate.
15. Wage Negotiations
The National Coal Wage Agreement-IX was signed on 31 st January, 2012
for a period of 5 years i.e. from 01-07-2011 to 30-06- 2016 for the
non-executive employees of Coal Industry in the meeting of JBCCI-IX
(Joint Bipartite Committee for the Coal Industry) held on 31 st
January, 2012. Coal India was the first PSU to settle the Wage
Agreement within six months from the date of notification. It was based
on detailed analysis of financial impact and sustainability of the
industry. The entire agreement was finalized in 6 meetings.
16. Corporate Governance
CIL has 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, Govt, of India and 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.
17. Expectation
I am confident that CIL shall continue its move for achieving greater
heights in future, meet the expectation of all the stakeholders and the
nation at large with the dedicated performance at all levels.
18. Acknowledgement
I express my sincere thanks to all the shareholders, Ministry of Coal,
other Central Government Ministries and Departments, State Governments,
all employees, Trade Unions, consumers and suppliers for their
unstinted support and relentless co- operation.
Kolkata S. Narsing Rao
Dated : 21st July2012 Chairman