I am delighted to welcome you all to 46th Annual General Meeting of yourcompany Coal India Limited. The Directors' Report and Financial Statements for the yearended 31st March' 2020 together with the report of Statutory Auditors andreport and review of Comptroller & Auditor General of India are already with you. I amsure you are fully aware of the financial & physical health of your company.
1. Importance of Coal and Coal India Limited
Coal is our country's irreplaceable prime energy source. Coal is at the forefront ofthe nation's energy march in meeting the demand. Notwithstanding the projections overrenewables displacing coal it will continue to dominate India's electricity generationfor few more decades. Additionally coal will continue to stoke up many non-powerindustries as well viz. cement fertilizers sponge iron aluminium and a host of otherindustries. In India coal accounts for around 55% of the country's primary commercialenergy. Nearly 72% of the entire power generated in the country is coal based which is atestimony to the importance of coal.
Admittedly a conscious impetus is laid on alternative clean and renewable energysources especially solar. India targets to add 175 GW of renewable energy capacity by2022 and 275 GW by 2027. The country is however aiming for an ambitious RE target of 275GW by 2027. This move is in accordance with the Intended Nationally DeterminedContribution (INDC) of the nations as committed in Paris during COP-21. World over manycountries are migrating from coal to cleaner forms of renewable energy sources but inIndia the situation is different. The question is can renewables take over coalcompletely in our country? Not in the near future at least.
Solar Wind Hydel and natural gas supplement coal in meeting energy needs but cannotsubstitute wholly. For the past couple of years India accounted for around 11% of theglobal coal consumption. India remains the second largest coal consumer in the world.
With Coal holding such a large sway in the Indian energy sector your company producesaround 83% of nation's entire coal output. During 2019-20 around 80% of the company'sentire coal supply was catered to power sector. Importantly Coal India ascertained thatas on 1st April 2020 there was not a single coal fired power station in thecountry that was in critical or super critical condition for want of coal. In fact thepower stations are still flush with record high coal stocks. Your company is committed toincrease its production and supplies to the mandated required levels.
Renewables and coal have to co-exist for some time before renewable can significantlycontribute to a larger share of India's energy basket. At some point of time in futurethis is bound to happen but till such time coal remains the dominant energy source in thecountry.
2. Notable Achievements of 2019-20
Despite many challenges that your company had to face especially the extended and heavymonsoon inundation of Dipka mine subdued demand for power COVID-19 in the lastfortnight of March' 20 etc. it managed to come back strongly in the second half of thefiscal 2019-20 making up for most of the lost ground in the first half. Coal India as awhole produced 602.14 Million Tonnes (MTs) during 2019-20 accomplishing 91% of thetargeted production. Coal off-take was 581.93 MTs which is 88% of target materializationdue to subdued demand from the consuming sectors.
Even under the trying conditions your company had achieved new highs and admirableaccomplishments during 2019-20:
Produced 84.38 MTs of coal during March 2020 your company has set a record forall time high production in a single month since its inception.
Coming back strongly in the last quarter of FY 2019-20 your company marked arobust 9.9% production growth compared to same quarter of FY 2018-19. Your companyproduced 213.71 MTs of coal during January-March 2020 an increase of 19.26 MTs comparedto 194.45 MTs produced for the same period in FY 2018-19.
During the second half of the fiscal 2019-20 Coal India produced 120.28 MTs ofmore coal than what it did in first half. Against 240.93 MTs in the H1 of FY 2019-20 yourcompany produced 361.21 MTs in the next six months from October 2019 to March 2020.
South Eastern Coalfields Limited for the second year in succession sailed past150 MTs production milestone the only CIL producing company to have done so producing150.55 MTs.
Northern Coalfields Limited repeated its commendable feat of previous fiscal in2019-20 as well when it surpassed its annual production target of 106.25 MTs four daysahead of the closure of the fiscal. Eventually NCL produced 108.05 MTs.
Western Coalfields Limited reached its annual production target of 56 MTs threedays ahead of the closure of the financial year closing the year with 57.64 MTsproduction.
Eastern Coalfields Limited Northern Coalfields Limited and Western CoalfieldsLimited registered growth in 2019-20 over last year.
Northern Coalfields Limited surpassed its off-take target of 106.25 MTs by 1.17MTs and registered a 5.8% growth over last year.
Better supply logistics management ensured that the average coal stock at thepower stations maintained at comfort levels throughout the year. Not a single linked coalfired power plant was in critical list for want of coal as on 31 March 2020.
Coal stock at power houses at 45.01 MTs as on 31 March 2020 was the highest ina decade equivalent to 28 days consumption 6 days more than the norm of 22 days.
With power sector adequately stocked with coal supplies Coal India stepped upits supplies to non-regulated sectors (NRS) during 201920. Your company cleared around 91%of backlog arrear rakes of this sector pertaining to years 2017-18 and 2018-19. Of the5143 arrear rakes as on 1 April 2019 of NRS Coal India liquidated 4661 rakes at theclosure FY 2020.
During 2019-20 to promote ease of doing business IRLC (Irrevocable RevolvingLetter of Credit) payment facility has been introduced for non-power consumers also.
During 2019-20 your company has offered 10.21 MTs of coal to power plants underimport substitution mechanism compared to 8.22 MTs in the preceding fiscal.
3. Financial Performance
Your company achieved Profit Before Tax (PBT) of Rs.24071.32 crores ProfitAfter Tax (PAT) of Rs.16700.34 crores.
CIL achieved gross sales of Rs.134979.13 crores and net sales of Rs. 89373.34crores.
All Subsidiaries of Coal India Limited had earned profit Before Tax during theyear.
Your Company and its Subsidiaries paid/adjusted Rs.43058.72 crores towardsroyalty GST Cess District Mineral Foundation (DMF) and National Mineral ExplorationTrust (NMET) and other levies.
4. Strategies for Growth
To ramp up coal production18 mining Project Reports have been cleared by CoalIndia and Subsidiary companies' Board in 2019-20 with a rated capacity of 132.04 MTY andsanctioned capital of Rs. 21244.55 Crores.
During the year your company took possession of 3336.12 Hectares of land whilenotification u/s 9 of Coal Bearing Areas (CBA) (A&D) Act 1957 received 115.81Hectares. Notification u/s 11 of CBA (A&D) Act 1957 - was 631.58 Hectares.
Contract Management Initiatives :
Pre-Qualification for Tenders value up to Rs.50.00 Lakh has been removed forentry of new Bidder without any Technical and Financial credentials in works and services.The Requirement of Work Experience has been reduced and work experience with wider domainhas been allowed for more participation and competitive bidding.
To make a quantumjump in coal production MDO documents for OC UG Mines havebeen finalized with valuable input from all Stakeholders approved by CIL Board. Four (4)Tenders (CCL-3 MCL-1) with 20-25 years contract period have been floated. Tenders forTen (10) more Mines would be floated shortly. MDO document for abandoned/discontinuedmines is under finalization with advanced mining technology to augment the productionfurther.
To meet the urgent requirement of construction of CHP SILO RLS etc. thePre-Qualification Criteria of Work Experience has been reduced by 50% Working Capitalrequirement relaxed and experience of similar nature of work broadened for widerparticipation and competitive bidding.
5. Enhancement of Coal evacuation infrastructure
To augment availability of rakes for evacuating increased quantities of coal inthe South East Central Railway circuit feeding to 15 Power Houses Coal India in amaiden venture under General Purpose Wagon Investment Scheme introduced by IndianRailways has approved procurement of 40 rakes of BOXN-S railway wagons at a capital costof Rs 675 Crores. Having its own rakes provides strength to the company to move supply ofcoal. This could facilitate enhanced indigenous supply and would also help reduce importsto some extent.
A 44 km long new railway line in Chhattisgarh under East Rail Corridor fromKharsia to Korichhapar turned operational on 12th October 2019 which enabledevacuation of coal from greenfield region of Mand-Raigarh. East Rail Corridor is developedby a CIL JV Chattisgarh East Railway Limited (CERL) a Special Purpose Vehicle among SECLGovernment of Chattisgarh and IRCON International Limited. Total approved layout of theproject is approximately Rs. 3055 Crore. Alignment of feeder lines from main lineintegrating with Chhal OC Baroud OC and Durgapur OC Mines of SECL have been finalized.
Doubling of the Jharsuguda- Barpali section along with a flyover complex atJharsuguda and seven bulbs at Barpali at an estimated cost of Rs 2900 Crores in MCL hasbeen approved for evacuating 65 Mt of coal from Ib Coalfields.
CIL has taken steps to upgrade the mechanized coal transportation and loadingsystem under 'First Mile Connectivity' projects.
In the First Phase 35 FMC projects having 406 MTY capacity with estimated capitalexpenditure of Rs.12505 Crs are under execution. Out of these 35 FMC projects 2 projectsof 26 MTY capacity have already been commissioned. As on date 7 FMC projects of 91 MTYcapacity are under construction. Further tenders have been floated for 14 additional suchprojects. Tenders for the remaining 12 FMC projects shall be floated by September'2020.
Ambit of the FMC projects are now being widened and 14 mines with less than 4 MTYcapacity has also been identified for implementation in the second phase. These 14 FMCprojects of 100 MTY capacity are estimated to incur a capital expenditure of Rs. 3479Crore tenders for which are planned to be floated by March'2021. These projects are alsoplanned to be operationalised by 2024-25.
Coal India Limited (CIL) has signed a Memorandum of Understanding with IndianPort Rail Corporation Limited (IPRCL) to execute its rail infrastructure worksconstruction of additional sidings and rail line connectivity with railway main lines.This is in addition to the already existing MoU with RITES. The move will help to expediteCIL's endeavour to implement the First Mile Connectivity projects as two implementingagencies are now available for executing rail infrastructure works.
6. Other Development Areas
Underground Mechanization: For mechanization of underground mines 26Continuous Miners are proposed to be deployed in 19 UG Mines in 5 Years starting from2019-20. Project Reports/ schemes of all these mines have been approved for this purpose.2 Continuous Miners have been commissioned in 2 identified mines during 2019-20 (BangwarUG SECL and Kumardih B UG ECL).
Project Reports for 2 mines of BCCL planned for deployment of Powered Support LongWall have been approved. Moreover 2 mines have been identified for deployment of HighWall miners (one each at ECL and SECL).
Enterprise Resource Planning:
With an objective of becoming an efficient and modern dynamic organization CIL hasdecided to deploy latest Information Technology in all aspects of its operation by settingup an ERP system.
Global Business Blueprint was released on CIL Foundation Day 2019 by Shri PralhadJoshi Hon'ble Minister of Parliamentary Affairs Coal & Mines. Implementation of SAPERP in Phase I at CIL MCL and WCL is in Realisation Stage. Coal India is endeavouring forearly SAP ERP implementation at ECL BCCL CCL CMPDI NCL and SECL in Phase II to derivecomplete benefit out of SAP ERP.
3551 employees were trained in functional and technical modules of SAP ERP and 268 daysof training was provided.
Coal Quality Measures: Coal quality assessment through third party agencyhas been implemented. Presently 99% supply to power utilities is being covered undersampling.
For improved consumer satisfaction and enhanced transparency on coal quality supplyunder all FSAs and different e-auction schemes have been covered under Third Partysampling for both Power and Non-Power consumers.
Major infrastructure facilities at loading point for sample preparation has beenput in place by coal companies. 49 labs across the companies have received NABLaccreditation and accreditation process for another 8 labs is underway
HEMM Procurement: Tenders for procurement of Heavy Earth Moving Machineryworth over Rs. 5900 Crores have been finalized for augmentation of coal production andimproving age profile of HEMM.
Updation of Manuals and Policies: Coal India limited has comprehensivelyreviewed and updated its Purchase Manual which was issued in 2004. Also for the firsttime a uniform Policy for Disposal of Scrap has been finalized and circulated forimplementation across CIL.
Solar Initiatives: In order to become Net Zero Energy company CILproposes to execute Solar Projects through CNUPL SECI and proposed JVC of CIL-NLCIL togenerate 3 GW of solar energy.
MoU with Russia: In the august presence of Hon'ble PM of India andHon'ble President of Russian Federation a bilateral Memorandum of Understanding (MoU) wasexecuted on 4th September 2019 at Vladivostok Russia between Coal IndiaLimited and Far East Investment & Export Agency - a Russian Government agency toleverage the bilateral relations to venture into the business of acquisition developmentand operation of coking coal assets in the Far East Region of Russia.
Surface Coal Gasification (SCG): Committed to reduce environmentfootprint in addressing Climate Change your company is promoting initiatives for cleanerand alternative uses of coal through SCG route that is conversion from coal to syngasand subsequently into chemicals.
Setting up of Urea Plant: Talcher Fertilizers Limited a JV company ofCIL with RCF GAIL and FCIL has been entrusted for setting-up of an integrated coalgasification based urea plant at the premises of closed fertilizer plant of FCIL atTalcher (Odisha). Work Orders worth over Rs. 7800 crores have been awarded in September2019 for setting up of Coal Gasification plant and Ammonia-Urea plant on Lump Sum Turnkey(LSTK) basis.
Another JV company named Hindustan Urvarak & Rasayan Limited (HURL)comprising of CIL NTPC IOCL FCIL and HFCL is involved in setting up of natural-gasbased 1.27 MTPA urea plant at the premises of closed fertilizer plants of FCIL atGorakhpur (U.P.) & Sindri (Jharkhand) and that of HFCL at Barauni (Bihar). In 2018contracts were awarded to the respective successful bidders for setting up of the threeplants on Lump-Sum Turn Key (LSTK) basis. Construction activities are in progress at allthree sites. The urea production is expected to commence in the year of FY 2021-22.
Standardization of Unified IP scheme: Unified IP scheme for Coal Indiaand all its subsidiaries has been devised to ensure seamless integration ofinterconnectivity of different networks for data transfer as well as for ERPimplementation.
7. Measures taken to combat COVID-19.
Extension of facility to work from home: During the last week of FY2019-20 as Covid-19 Pandemic led to lockdown measures to work from home and to connectpeople over Video Conferencing from home through Internet using Laptop / Mobiles have beendevised. Facility to access e-office from home / remote locations through internet hasalso been extended to officials by utilizing in-house resources of WAFA for seamlessfunctioning of official work.
Ease of doing business
For doing ease of business your company has taken number of initiatives includingincrease in the trigger level for supply of coal for power producers from 75% to 80% ofthe ACQ waived performance incentive for two quarters of FY 2020-21 introduced Usance LCfor power and NRS consumers provided a dispensation of change of mode of transport ofcoal from Road to Rail mode for consumers having difficulties in lifting coal via roadmode under FSA through NRS Linkage Auction route and Power consumers under Special ForwardE-Auctions; and reduced the reserve price to notified price for all e-auction schemes tillsecond quarter of FY 2020-21.
Welfare measures taken during COVID-19
CIL and its subsidiaries have distributed 281815 cooked food packets and136168 packed rations to downtrodden and needy during the lockdown period.
Coal India's 35 hospitals and health facilities created outside hospitals spreadacross eight coal producing states have set aside 1234 beds for corona suspected cases andcorona positive cases.
Central Hospital of Bharat Coking Coal Ltd. in Dhanbad Jharkhand Central HospitalGandhinagar Jharkhand and Regional Hospital Ramgarh of Central Coalfields Ltd Jharkhandhave been converted to COVID hospital and handed over to State Government to treat thepatients. Mahanadi Coalfields Ltd. has fully funded a state-of-the-art 500 bedded SUM -COVID Hospital in Bhubaneswar Odisha. A 50 bedded main hospital of South EasternCoalfields Ltd. in Korba Chhattisgarh has been converted to COVID hospital and handedover to State Government of Chhattisgarh to fight COVID. In addition SECL has contributedRs. 4.08 crores for upgradation of District hospital Bilaspur to 100 bedded exclusiveCOVID treatment centre. Further SECL also contributed Rs. 4.19 crores for upgradation ofGovernment Medical College Ambikapur to 100 bedded exclusive COVID treatment centre.
CIL subsidiaries has distributed 1542982 masks and 63256 litres of handsanitizer to its employees and people living in and around its operational areas to fightCOVID19.
Subsidiaries of CIL have procured N95 masks ventilators PPE suits thermalscanners & oxygen cylinders to fight the COVID pandemic.
State-of-the-art-technology 'Fog Cannons' are being pressed into service tosanitize residential colonies camps of contract workers and neighbouring villages.
In Coal India safety norms are viewed holistically with continuous improvementand without slackening its commitment to make mining operations hazard free. 2019witnessed a fall in fatal accidents fatalities and serious accidents - the lowest mineaccident statistics since the inception of Coal India. Fatal Accidents reduced to 30 from33 in 2018 whereas fatalities declined from 43 in 2018 to 34 in 2019 - sharp fall of 21%.Serious injuries reduced from 98 in 2018 to 90 in 2019 representing 8% reduction.
Special relief amount to the next kin of the deceased in case of fatal miningaccident increased from Rs.5 Lakhs to Rs.15 Lakhs. This is apart from the compensationamount paid under the Workmen Compensation Act.
During 2019-20 Safety Audit completed in 321 producing mines bymulti-disciplinary teams. Necessary corrective steps have been taken as recommended bySafety Audit.
'Universal Equipment Simulator' was installed at Central Excavation TrainingInstitute (CETI) in NCL Singrauli to impart simulation training to Dragline Shovel andDozer Operators.
Your company is one of the highest CSR spenders among the PSUs touching the lives ofthe countrymen. CIL's CSR activities largely encompass education rural developmenthealthcare women empowerment skill development sports etc. CIL and its subsidiarieshave spent Rs. 587.84 crores on CSR activities during 2019-20.
During FY 20 CIL has made considerable contribution for the rehabilitation of disasteraffected areas as under:
Rs. 50.32 Crores to Odisha Power Transmission Corporation Ltd. (OPTCL) forreinstallation of power transmission lines damaged due to cyclone Fani.
Rs. 25 Crores for reconstruction of government school buildings damaged due tofloods in Dharwad and Bagalkot districts of Karnataka.
Rs. 16.50 crores for livelihood rehabilitation project and purchasing of waterambulances in flood affected Majuli district of Assam.
Contributed Rs. 160 Crores to the PM CARES Fund for fight against Covid-19.
Two of the subsidiary companies of Coal India Central Coalfields Limited andMahanadi Coalfields Limited were conferred National CSR Award by Hon'ble President ofIndia for contribution to National Priority Areas. CCL got the award for promotion ofsports and MCL for health safe drinking water and sanitation.
10. Environment Measures
Coal India carried out plantation of 1976618 saplings across 812.98 Hectaresof land against the target of 1972788 saplings in 2019-20.
Coal India's efforts in making water available to the communities around itsmining areas for irrigation and other domestic uses benefited 7.48 Lakh populace duringthe fiscal.
In 2019-20 your company has obtained Environmental Clearance (EC) for 31 miningprojects with incremental capacity of 62.035 Mty the highest since 2011-12.
For FY 2020 Stage I Forestry Clearance (FC) was approved for 7 Projectsinvolving 952.04 Hectares and Stage II FC was approved for 5 projects involving 1248.86Hectares. The Stage II FC is the highest since 2014-15.
Coal India has developed Internal Monitoring Mechanism compliances of EC/FCconditions which helped in granting 11 EC proposals for the period of 30 years. EarlierEC was for one year only. CIL has also created a dedicated Sustainable Development Cell.
CIL is in the process of preparation of Environment Social & Governance(ESG) report from external agency / Consultant for which open tender was floated. Focus onESG will help your company to understand the positive impacts and manage the risks of itsoperations on customers investors employees and communities. It will help in assessingthe success of your company beyond the balance sheet and examine how it impacts thebroader society at large.
Environmental issues will amongst others include company's commitment on reducingenergy use waste pollution and conservation of natural resources especially landforests etc.
Social issues would include the company's business relationships with supplierscustomers stakeholders local community and working conditions for its employees - theirhealth & safety.
Governance issues will amongst others include whether company uses accurate andtransparent accounting methods are stockholder's opinions heard refrains fromcontribution for undue favourable treatment and abhorrence of illegal practices.
11. Corporate Governance
Your company has complied with the conditions of Corporate Governance as stipulated inthe Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs)issued by the Department of Public Enterprises Government of India and Regulation 34(3)read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with the Stock Exchanges. As required under the guidelines andprovisions a separate section on Corporate Governance has been added to Directors' Reportand a Certificate for compliance of conditions of Corporate Governance has been obtainedfrom a practising Company Secretary.
Your company has conducted Secretarial Audit for 2019-20 as required under CompaniesAct 2013 and obtained an unqualified report except for appointment of required number ofIndependent Directors and woman Independent Director and the same is enclosed as a part ofDirector's Report. As stipulated by SEBI your company also conducted Secretarial Audit bya practising Company Secretary for compliance of SEBI Regulations and circulars/guidelinesduring 2019-20 and received an unqualified report except for appointment of requirednumber of Independent Directors and woman Independent Director.
Your company's vision is to ensure that there is no shortage of coal in the country andto make the country self-reliant in coal. Coal India envisions to be a commercially viablecompany and endeavours to move ahead as a contemporary professional consumer friendlyand successful corporate entity committed to national developmental goals. The vision alsoextends to dedicate itself to the service of the countrymen in providing the primarycommercial energy in an affordable and environmentally friendly manner. Your company aimsto be not only a valued company but a company with values.
On behalf of your Company's Board of Directors I wish to convey my deep gratitude toyou our valued shareholders for your continued support and trust. This motivates us toexcel 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 ofCoal Government of India. I also express my sincere thanks to other Central GovernmentMinistries and Departments State Governments all employees Trade Unions AuditorsConsumers Suppliers and all other stakeholders for their continuous co-operation.
| ||Sd/- |
| ||Pramod Agrawal |
|Dated : 3rd August 2020 ||Chairman |
|Place : Kolkata || |