In liberalised coal mining regime, Coal India seeks advantage

The projected liberalisation of the coal sector has opened up a new scope for Coal India

The projected liberalisation of the coal sector to private commercial miners later this year, has opened up a new scope for Coal India, which of late is on a diversification mode.

While Coal India has been engaging its wholly owned subsidiary, Central Mine Planning and Design Institute Limited (CMPDI) to execute services in exploration, mine planning & design and other mining needs, it now feels that this very subsidiary can play the role of a key mining consultant for public as well as private companies in a liberalised mining regime.

As a result, the coal behemoth is now preparing its consultancy arm to expand its horizon, not just in the private coal mining segment, but also venture into other mineral mining consultancy services as well.

CMPDI not only plays its role as Coal India’s advisor, but often engages with the petroleum and natural gas ministry as well. But importantly, it has been getting consulting orders from private mining companies as well.

“Lately, there has been a three-fold increase in our revenue from the private companies and with the (coal) mining sector opening up now, I think Coal India, via CMPDI, can play its role as a key mining consultant”, a senior CMPDI official told Business Standard.

While senior Coal India officials confirmed that talks are on to diversify CMPDI’s consulting portfolio, which will mean opening up of the mining consultancy front of Coal India to private players, the consulting arm of the world’s largest coal miner is considering restructuring its organisational profile to boost productivity as well as revenue.

“The most aspect, however, is how we position ourselves to the private companies. We have core competency in the technical aspects of mining and can offer our services to private companies other than the PSUs, as well”, the official, quoted earlier added.

However, CMPDI, which so far, has been focussing on coal, petroleum and gas mining consultancy is keen to expand its horizon to cover all fields of mining.

“The idea is to turn the consultancy wing of Coal India into a holistic mining consultant”, a second official from CMPDI told this newspaper.

Thus, Coal India’s consulting wing is now seeking advise from consultants to compete with other private companies offering mining consultancy.

A Coal India official said that some companies, which used to be CMPDI clients, have started their own consultancy and planning division and are now providing consulting services to other companies.

“Naturally, we are in competition with them and thus need to have an edge”, the Coal India official told this business daily, reasoning the cause for seeking opinion of an advisory to emerge strong in the consultancy business.

In course of formulating this strategic roadmap, the official said there is a need for a proper study of future market scenario in the coal sector and possible opportunities for CMPDI for foray in other areas. 

The Coal India subsidiary is specifically on the lookout for enhancing its sales through diversification in areas of exploration, mining and allied engineering sectors of other than coal sector, development of alternative sources of coal based energy and diversification in areas of new business opportunities.

Coal India is also considering to replenish its technical manpower in CMPDI to drive its future growth but is yet to narrow down on the specifics.

The process to major in consultancy services was initially signalled long back, when CMPDI’s chairman and managing director, Shekhar Saran was quoted in the 2015-16 annual report saying, “The Pricing Mechanism of the company is being studied with the help of ICWA and possible strategies for enhancing quantum of outside jobs (non-Coal India) in value terms including enhancing the sales through diversification in areas of mining and allied engineering sectors of other than coal sector, development of alternative sources of coal based energy, etc., are being studied”.

In its recent diversification bids, Coal India will be floating a bid for a coal-to-liquid project via its subsidiary, Central Coalfields Ltd, which can produce petroleum oil. Besides, it is also floating a joint venture with National Thermal Power Corporation to revive two sick units of Fertilizer Corporation of India which will entail Rs. 18,000 crore investment in the next four years.