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Coal India Ltd.

BSE: 533278 Sector: Metals & Mining
NSE: COALINDIA ISIN Code: INE522F01014
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OPEN 183.45
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VOLUME 102022
52-Week high 209.00
52-Week low 132.80
P/E 10.10
Mkt Cap.(Rs cr) 113,179
Buy Price 183.55
Buy Qty 431.00
Sell Price 183.65
Sell Qty 356.00
OPEN 183.45
CLOSE 182.10
VOLUME 102022
52-Week high 209.00
52-Week low 132.80
P/E 10.10
Mkt Cap.(Rs cr) 113,179
Buy Price 183.55
Buy Qty 431.00
Sell Price 183.65
Sell Qty 356.00

Coal India Ltd. (COALINDIA) - Chairman Speech

Company chairman speech

Dear Shareholders

I am delighted to welcome you all to 47th Annual General Meeting ofyour company Coal India Limited. The Directors' Report and Financial Statements for theyear ended 31st March 2021 together with the report of Statutory Auditors and report andreview of Comptroller & Auditor General of India are already with you. I am sure youare fully aware of physical & financial health of your company.

1. Importance of Coal and Coal India Limited 1.1 Coal

Coal as primary commercial energy fuel has been sustaining thecountry's energy requirements for decades now and would continue to retain its relevancefor the few more decades as well. With around 55% share coal occupies the major space inIndia's energy basket. The country's planners are alternatively laying impetus on greenerand renewable energy forms in a bid to migrate from largely fossil driven energy economyto one that is powered by cleaner sources. From an environmental perspective this is awelcome move. The entry of renewable energy sources however would not destabilize coalin immediate future. It would continue its lead role in India's electricity generation asindicated by the consumption pattern.

Of the country's total power generation of 1378.525 Billion Units (BU)during 2020-21 including renewable energy sources coal based generation was 950.751 BUwhich is around 69% highlighting coal's importance.

Additionally coal continues to stoke many non-power industries as wellviz. cement fertilizers sponge iron aluminium and a host of other industries.

The world over many countries are moving away from coal but the Indiancontext is different. In India what makes coal a preferred energy fuel is its abundanceavailability and affordability. Till alternative energy sources start making significantcontribution there is no replacement for coal as the country's irreplaceable prime energysource.

1.2 Coal India Limited

With coal commanding such prominence in the Indian energy sector CILis at the forefront of the nation's coal production. CIL alone produces around 83% ofcountry's entire coal output. Your company is committed to increase its production andsupplies to the mandated levels.

In a country where 69% of the total electricity generation is coalbased your company virtually empowers the nation's power sector.

Around 80% of CIL's total supplies are catered to power sector.

CIL is also one of the largest contributors to the governmentex-chequer - both Central and State - and also plays a crucial role in country's socialfabric touching the lives of the countrymen in more ways than one.

2. 2020-21: A Challenging Year

Financial Year 2020-21 posed a never-witnessed-before challenge in theform of Covid-19 pandemic. It was a difficult situation to cope up not only for yourcompany but for the country as well. In fact it was a global phenomenon of unprecedenteddaunting proportions.

But your company never ceased its operations even for a daycontinuing excavation production and off-take even in the face of such hardship. Thecourage and resilience exhibited by your company's energy soldiers was exemplary.Notwithstanding the adversity employees at all levels kept up their spirit in the serviceof the country braving the odds. What was important was to keep up the morale of theofficers and the staff. So officials at all hierarchy levels right from CMDs of CIL'ssubsidiary companies down to GMs Area Managers have donned leadership role in keeping thespirit up in continuing the mining activities resolutely.

Health and well-being of the employees was immediate uncompromisingpriority. Setting up of beds has been stepped up as a frontline medical support. Healthinfrastructure facilities have been created on war footing under CSR banner. Extendingcurative care was not limited to the employees and their dependants but was also extendedto community within the proximity of command areas. Containing the spread of the pandemicin the mining areas was taken up with all seriousness it deserved.

With the lockdown in place the resultant reduced coal demand was a bigchallenge to increase off-take. To step up coal supplies your company has proactivelyrolled out a set of consumer friendly measures which have yielded positive results.

Over Burden Removal (OBR) was consistently high throughout the yearwith large strips of OB excavated despite Covid posed slowdown. Even under hardships yourcompany had achieved new highs and accomplishments during 2020-21.

3. Production & Off-take

CIL's production at 596.22 Million Tonnes (MTs) was 90.34% achievementof the MoU target.

Despite lukewarm demand for coal your company could supply 574.48 MTswhich is 87.04% of the target achievement during the year.

CIL came back strongly in the second quarter of FY'21 in the face ofinclement monsoon and pandemic difficulties striking a positive 11 MTs and 11.90 MTsincrease in production and off-take respectively clocking growth of 10.6% and 10%.

The performance momentum was sustained in the third quarter of the yearas well (October-December 20) with 6.3% production growth and 9% off-take growth.

In what is now turning out to be an established practice NorthernCoalfields Limited for the sixth successive year has achieved its annual productiontarget. During 2020-21 NCL achieved its target of 113 MTs six days before the closure ofthe fiscal recording 6.47% growth. South Eastern Coalfields Limited maintaining itsproduction tempo breached the 150 MT mark for the third year in a row. It had surpassed 1MT coal production per day on four occasions in FY21.

Brushing aside the pandemic challenge Mahanadi Coalfields Limitedregistered 5.45% production growth and a robust 9.47% growth in coal off-take.

9 Mining Projects having a capacity of 27.60 Mty have been completedduring the year FY 2020-21.

3.1 Over Burden Removal

Your company maintained a consistent growth trajectory in OBRthroughout FY'21 posting 16.49% growth over preceding year. CIL has excavated 1344.68Million Cubic Metres (M.Cu.M) of OB during FY'21 compared to 1154.33 M.Cu.M of thepreceding year.

OBR during 2020-21 was the highest ever in volume terms and secondhighest in growth percentage terms over a decade. OBR facilitates faster coal productionin future.

Composite excavation which is extraction of coal and OB in OC mineswas 1699 M.Cu.M during the year registering a growth of 12.39% compared to 1512 MCu.M ofFY'20.

4. Measures to boost Supplies

Your company has proactively planned a set of measures to boost coaloff-take and keep up the supply momentum. It was vital in view of the declining demand.The measures were:-(a) Waiver of Performance Incentive for additional quantities of coalsupplied under FSA to Power Sector for the entire FY'21.

(b) Usance LC facility was introduced for Power Sector andNon-Regulated Sector Consumers (NRS) for special forward e-auction and exclusivee-auction.

(c) Reserve price under all e-auction windows was kept at par withnotified price during the first Six months of FY'21 encouraging coal consumers to liftadditional quantities.

(d) Flexible lifting option was allowed throughout the fiscal for NRSconsumers irrespective of Monthly Scheduled Quantity. (e) Flexibility for change of modeof coal transport from road to rail and vice-versa was allowed.

5. Initiatives to curb coal imports under 'Atma Nirbhar Bharat'

To reduce import dependency to the extent possible and push upindigenous coal supply CIL undertook a series of concessions and benefits for itscustomers. These include: (a) Opening a new e-auction window exclusively for coalimporters in October'20.

(b) To substitute coal imports with domestic coal for blendingpurpose allowed subsidiary coal companies to sign MoUs with 17 power plants linked tothem.

(c) Allocation of additional coal to Central and State Gencos underflexi-utilization enabling them to avert coal imports. (d) Enhancement of AnnualContracted Quantity (ACQ) for power plants to 100% of normative requirement from 90%. (e)Offering increased quantities of coal to non-regulated sectors against FSAs up to 100% ofACQ.

(f) Elevation of Trigger level under specific FSAs for power sectorfrom 75% to 80%.

The cumulative effort of the set of initiatives resulted in curbingcoal imports to the tune of 90 MTs. Had your company not adapted this inventiveness thecustomers would have had no alternative than to source coal from imports.

6. All time high e-auction booking

Creating an all-time high record CIL has booked 124 MTs of coal underfive e-auction windows in FY'21 eclipsing the previous record of 113.6 MTs achieved in2016-17.

This reflects a strong 88% growth compared to 66 MTs booked in 2019-20.In volume terms the increase was 58 MTs.

7. Coal Quality Improvement

CIL's commitment for supply of better quality coal reflected a positivejump as the grade conformity improved to 63% during FY'21 from 59% over preceding year asper the third-party sample analysis.

The average quality of coal supplied during the year was better thanthe declared grade of coal netting CIL quality bonus.

To further strengthen the sampling and analysis of coal supplied yourcompany has engaged two globally reputed Third Party Sampling & Testing agenciesCOTECNA Inspection India Private Limited and SGS India Private Limited. Their engagementis in addition to the existing agencies CSIR-CIMFR and Quality Council of India.

To ascertain the quality of supplied in FY'21 487 MTs of coal wassampled and analysed compared to 448 MTs in FY'20 registering 8.7% sampling growth despitethe pandemic constraints.

Production through Surface Miners deployed in OC mines which entailblast free selective mining leading to better quality coal output and consistent sizedcoal was stepped up during 2020-21.

Surface miners produced 279.92 MTs during FY'21 which is 49% of thecompany's total OC production of 569.77 MTs. Production growth through Surface Minerscompared to FY'20 was 4%.

8. Strategies for Growth

In a new record for a single year the highest ever 36 mining projectswere cleared by your company in FY'21 with sanctioned capacity of 332.77 MTs andincremental capacity of 220.12 MTs. These projects would add substantially in futureproduction growth.

Your company has devised a transformational plan for operationalizing15 mines through engagement of Mine Developer cum Operators having an ultimate capacityof 160 MTs per annum which would contribute towards production in the coming years.

CIL constantly monitors the progress of 35 high yielding miningprojects for enhanced output which between them contribute 70% of the company's totalannual coal output.

During 2020-21 these top 35 mines have contributed 450 MTs which is75% of the year's total production of 596.22 MTs. The growth is 3.69% compared to theproduction of 434 MTs through these mines in FY'20.

2675.43 Hectares of land was possessed during the year.

9. Financial Performance

Your company achieved Profit Before Tax (PBT) of Rs 18009.24 CroresProfit After Tax (PAT) of Rs 12702.17 Crores. CIL achieved gross sales of Rs 126786.13Crores and net sales of Rs 82710.32 Crores.

Your Company and its Subsidiaries paid/adjusted Rs 41987.79 crorestowards Royalty GST GST Compensation Cess Cess District Mineral Foundation (DMF)National Mineral Exploration Trust (NMET) and other levies.

9.1 Record Capex

CIL has more than doubled its capital expenditure to an unprecedentedhigh of Rs 13283.83 Crores in FY'21 compared Rs 6269.65 Crores in FY'20 registering111.88% growth even amid the Covid slump.

This is 102.18% achievement of the target. The accomplishment comes ata time when Govt. of India had advised CPSEs of the country to scale up their expenditureto boost the economy.

CIL's original sanctioned capex budget was Rs10000 Crores for FY'21.However the government assigned your company a challenging 130% achievement of thebudgeted target to be evaluated as 'Excellent' under Capex parameter in MoU rating. CILstood up to the challenge and surpassed even the revised target of Rs 13000 Crores.

Impetus on accelerated HEMM procurement process land acquisition coalevacuation initiatives rail infrastructure strengthening timely contract finalizationsand execution joint ventures etc. has driven up the capital expenditure which was fullyfunded through internal resources.

The year's record capex will yield positive results to the company inensuing years in terms of production and coal transportation

10. Enhancing the Equipment

Fast tracking the equipment procurement process to strengthen HeavyEarth Moving Machinery fleet your company has formally closed deals for purchase of 96Dumpers of 240 Tonne capacity at an investment of Rs 2900.30 Crores. These dumpers are ofthe highest capacity currently operational in the country which play a critical role inCIL's opencast mines for production and OBR.

66 similar capacity Dumpers are already operational in SECL and oncethe 96 are added to the existing fleet the total would swell up to 162.

Contract for 5 Electric Draglines of 24M3 /88 R that is 24 Cu.Mbucket capacity 88.8 metres operating radius and 95 metres boom length was successfullysealed at a cost of Rs 2405.14 Crores. Such high number of machines were never purchasedat a single go at any point of time before.

CIL has also signed two purchase pacts totaling nearly Rs 400 Croreswith BEML Limited for procurement of Seven 150 Tonne Dumpers and Eight 190 Tonne Dumpers.

10 Surface Miners were deployed departmentally during the year. Ofthese MCL accounted for 5 SECL 4 and NCL 1. Your company has commissioned 2 ContinuousMiners with total capacity of 0.91 MTs/annum one each at SECL and ECL.

11. Strengthening evacuation infrastructure

CIL is enhancing its evacuation infrastructure to have sufficient coaltransportation outlets in place commensurate with its production in future.

Your company's rail infrastructure projects include laying railwaylines constructing rail sidings and coal handling plants (CHP) at mines with RapidLoading Systems (RLS) under First Mile Connectivity (FMC) projects.

CIL has successfully issued tenders for all the 35 FMC projects bySeptember'20 as was planned.

Under FMC CIL has issued LoA/work order for all the 35 FMC projectswhich comprise CHP-SILOs with RLS and its rail connectivity with the Indian Railwaynetwork. To come up at an estimated capital of Rs 11500 Crores these projects will havea capacity to evacuate 414.5 MTs of coal per annum.

The engine trial run between Korichapar- Dharamjaigarh section (45-74Km) of the Kharsia -Dharamjaigarh (0-74 Km) rail line was completed during the year.

Achieved the financial closure of Chattisgarh East West Railway Limitedrail project for Gevra Road - Pendra Road sector.

The doubling of the Jharsuguda- Barpali rail line along with 7 loadingbulbs at Barpali has been approved during the year. This will enhance evacuation capacityto 65 MTPA from its present 34 MTPA.

In yet another development the tripling of the Tori- Shivpur rail linehas been approved during the year. This shall enhance coal carrying capacity from 32 MTPAto 100 MTPA.

The dovetailing of existing and new rail sidings with rapid loadingsystem/silos of FMC projects will help improve loading quantity in future when productionexpands.

CIL has identified a new rail link connecting the buffer-ends of 32 Kmbetween Sardega- Pelma for implementation. This link will facilitate coal traffic movementfrom Basundhara and Mand Raigarh coalfields to North and Western parts of India bypassingthe already congested Howrah- Mumbai and Bilaspur- Pendra Road Trunk lines.

12. Enriching the Environment

To balance the carbon-di-oxide emission CIL has taken up large scaleplantation in its mining areas achieving 861.81 Hectares of green cover in FY'21. Thisrepresents 116% achievement of the targeted 739.5 hectares for the year. A total of 19.89Lakh saplings have been planted during the year.

Compared to plantation area of 813 hectares in 2019-20 the company hasregistered 6% growth in 2020-21.

Community use of mine water discharged from mines of differentsubsidiaries of CIL had increased by 40% over the preceding year benefitting 1091583populace in 703 villages.

51 opencast projects each producing more than 5 Million Cubic Metresof coal and overburden combined per annum monitored through satellite surveillancerevealed reclamation of 63.73% of total excavated area.

In a first CIL's Environment Social Governance (ESG) Report wasprepared by a Third Party reinforcing improved transparency. ESG

Report is far more detailed in scope than the earlier SustainabilityReport. The disclosures help in assessing the company's impact on business environment.

To conduct scientific studies related to environmental aspects ofmining CIL has engaged the services of NEERI (National Environmental Engineering ResearchInstitute) and ICFRE (Indian Council of Forestry Research and Education). In FY'21 CIL hasextended its Memorandum of Understanding with NEERI for another 5 years.

During FY'21 Indian Council of Forestry Research & Education(ICFRE) finalized the methodology for index rating of environmental conditions andperformance evaluation as per environmental clearance conditions in 35 CIL mines eachproducing 5 M.Cu.m of Coal and OB mined. The Environment Performance Rating Index (EPRI)has been finalized. This is a crucial evaluation process that will map CIL's environmentalprogress.

CIL in its first ever participation in competitive bidding of solarpower auction had won 100 MW solar power project in reverse e-auction conducted by GujaratUrja Vikas Nigam Limited. This is a move towards CIL's foray into greener energyproduction.

13. Green Clearances

CIL's subsidiaries have secured Environmental Clearance for 31 miningprojects and 2 washeries having incremental capacity of 27.80 MTY and 3 MTY respectively.

Stage-II Forestry Clearance (FC) was secured for 8 proposals totaling1387.06 Hectares of forest land and Stage-I FC for 1 proposal of 277.15 Hectares.

14. CSR: Concern for Community

Your Company is fully conscious and sensitive of its corporatecitizenry role and reaches out to the marginalized sections of the society through awell-structured Corporate Social Responsibility policy. CIL is one of the largest CSRspending entities in the country. In its battle to contain the spread of Covid-19 in itsmining areas and to step up medical facilities CIL has created a massive health careinfrastructure.

(a) CIL and its subsidiaries have spent Rs 553.85 Crores on CSRactivities exceeding the statutory requirement of Rs 434.51 Crores by

Rs 119.34 Crores.

(b) Of the total CSR spent of the year 48.57% that is Rs 269 Croreswas exclusively spent on Covid relief measures to the benefit of the community within theproximity of mining areas.

(c) Among the major activities undertaken during the year your companyhas set up more around 1500 beds making it one of the largest mobilizers among Indiancorporates.

(d) CSR efforts continued unceasingly during the second wave of thepandemic as well with total number of beds more than doubling to 3900. Your company hasalso taken a decision to set up 29 Oxygen generating plants across 27 hospitals includingits own and government hospitals.

(e) MCL has set up 525 bedded hospital at Bhubaneswar and 150 beddedhospital at Lakhanpur.

(f) CIL has converted government hospitals in Ambikapur BilaspurChattisgarh under SECL and another hospital in Dharwad Karnataka into 100 bedded Covidtreatment centers.

(g) NCL has provided 50 Ambulances to Government of Uttar Pradesh.

(h) Distributed more than 3 lakhs free food packets more than 17.56lakh masks and over 80800 liters of hand sanitizer to the needy community.

(i) The health care efforts initiated during the first wave of Covidare being actively pursued further expanding the medical facilities and infrastructure.

(j) Commenced the second phase of Thalassemia 'Bal Sewa Yojana' fortreatment of Thalassemia and Aplastic anemia Children. The step is expected to benefitmore than 200 underprivileged patients at a grant of Rs 20 Crores.

(k) Initiated the infrastructure improvement facilities in 1804government primary schools and 9 government Inter colleges. NCL has taken up distributing14298 numbers of furniture in Sonebhadra district Uttar Pradesh.

15. Safety - The Priority Concern

For your company safety health and well-being of employees has anoverriding importance over other factors. CIL lays as much importance on safety aspects asit does on its performance parameters. The primary concern of CIL is to safeguard itsprime assets - Men Mines and Machines. In CIL safety norms are viewed holistically tomake all mining operations safe and hazard free.

(a) Safety parameters have significantly improved in 2020 compared to2019. Fatalities have dropped to 30 during the year compared to 34 of preceding year.Serious injuries have also reduced to 80 from that of 90 in 2019. In percentage terms theimprovement factor is the highest since the inception of the Company.

(b) CIL concluded Safety Audit in 315 producing mines by Inter Areamulti-disciplinary safety audit teams. The audit measures suggested are being implemented.

16. Star Rating of Operational Mines

CIL as approved by Ministry of Coal has begun implementing StarRating Policy where all operational coal mines are rated though a system ofself-evaluation broadly under seven modules. Subsequent validation is done by Coalcontroller's Organization (CCO). All the mines will be given an official certificate byCCO mentioning their star rating and the particular reporting year.

Post completion of the validation the highest scoring mines under eachmodule across the country will be presented an award in a public ceremony.

Hon'ble Minister of Coal had launched a Star Rating Portal prepared byNIC team.

17. Corporate Governance

Your company has complied with the conditions of Corporate Governanceas stipulated in the Guidelines on Corporate Governance for Central Public SectorEnterprises (CPSEs) issued by the Department of Public Enterprises Government of Indiaand Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with the Stock Exchanges. As required under SEBI (LODR)Regulations 2015 a separate section on Corporate Governance has been added to Directors'Report and a Certificate for compliance of conditions of Corporate Governance has beenobtained from a peer reviewed practising Company Secretary.

Your company has conducted Secretarial Audit for 2020-21 as requiredunder Companies Act 2013 and obtained an 'Unqualified Report' except for appointment ofrequired number of Independent Directors and woman Independent Director and nonre-constitution of various subcommittees of the Board as required under SEBI (LODR)Regulations 2015 and Companies Act'13 and the same is enclosed as a part of Director'sReport. As stipulated by SEBI your company had also conducted Secretarial Audit by a peerreviewed practising Company Secretary for compliance of SEBI Regulations andcirculars/guidelines during 2020-21 and received an 'Unqualified Report' except for thoseobservations mentioned in Secretarial Audit Report 2020-21.

18. Vision

Your company's vision is to ensure that there is no shortage of coal inthe country and to make the country self-reliant in coal. Coal India envisions to be acommercially viable company and endeavours to move ahead as a contemporary professionalconsumer friendly and successful corporate entity committed to national developmentalgoals. The vision also extends to dedicate itself to the service of the countrymen inproviding the primary commercial energy in an affordable and environmentally friendlymanner. Your company aims to be not only a valued company but a company with values.

19. Acknowledgement

On behalf of your Company's Board of Directors I wish to convey mydeep gratitude to you our valued shareholders for your continued support and trust. Thismotivates us to excel in all our pursuits and constantly create value for you as well asfor the nation.

I appreciate the unstinted support and valuable guidance received fromthe Ministry of Coal Government of India. I also express my sincere thanks to otherCentral Government Ministries and Departments State Governments all employees TradeUnions Auditors Consumers Suppliers and all other stakeholders for their continuousco-operation.

Sd/-
Pramod Agrawal
Dated : 20th July 2021 Chairman-cum-Managing Director
Place : Kolkata (DIN- 00279727)

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