Coal India Ltd

BSE: 533278 | NSE: COALINDIA | ISIN: INE522F01014 
Market Cap: [Rs.Cr.] 2,27,831.11 | Face Value: [Rs.] 10
Industry: Mining / Minerals / Metals

Director's Report
DIRECTORS

To

The Members, Coal India Limited

Ladies & Gentlemen,

On behalf of the Board of Directors, I have great pleasure in presenting to you, the40th Annual Report of Coal India Limited (CIL) and Audited Accounts for the year ended31st March, 2014, together with the reports of Statutory Auditors and Comptroller andAuditor General of India thereon.

Coal India Limited (CIL) is a Maharatna company under the Ministry ofCoal, Government of India with headquarters at Kolkata, West Bengal. CIL is the single largestcoal producing company in the world and one of the largest corporate employers with amanpower of 3,46,638 (as on 1st April, 2014). CIL operates through 82 mining areas spreadover eight provincial states of India. Coal India Limited has 429 mines of which 237 areunderground, 166 opencast and 26 mixed mines. CIL further operates 17 coal washeries, (13coking coal and 4 non-coking coal) and also manages other establishments like workshops,hospitals, and so on. CIL has 27 training Institutes. Indian Institute of Coal Management(IICM) is an excellent training centre operates under CIL and imparts multi disciplinarymanagement development programmes to the executives. Coal India's major consumers arePower and Steel sectors. Others include cement, fertilizer, brick kilns, and a host ofother industries.

CIL has eight fully owned Indian subsidiary companies (direct): Eastern CoalfieldsLimited (ECL),

Bharat Coking Coal Limited (BCCL),

Central Coalfields Limited (CCL),

Western Coalfields Limited (WCL),

South Eastern Coalfields Limited (SECL),

Northern Coalfields Limited (NCL),

Mahanadi Coalfields Limited (MCL) and

Central Mine Planning & Design Institute Limited (CMPDIL).

In addition, CIL has a foreign subsidiary in Mozambique namely Coal India AfricanaLimitada (CIAL).

The mines in Assam i.e. North Eastern Coalfields continue to be managed directly byCIL. Similarly, Dankuni Coal Complex also continues to be on lease with South EasternCoalfields Limited.

MCL has three subsidiaries, namely MNH Shakti Ltd., MJSJ Coal Ltd. and Mahanadi BasinPower Ltd.

a. MNH Shakti Limited

MNH Shakti Limited has been formed with MCL having 70% stake along with Neyveli LigniteCorporation and Hindalco holding the rest. The coal production is targeted from TalabiraOCP with an annual capacity of 20 MT.

b. MJSJ Coal Limited

MJSJ Coal Limited has been formed with MCL having 60% stake along with JSW Steel,Jindal Thermal Power Limited, Jindal Stainless Steel and Shyam Metallics & EnergyLimited holding the rest. The coal production is targeted from Gopalprasad OCP with anannual capacity of 15 MT.

c. Mahanadi Basin Power Limited

Mahanadi Basin Power Limited has been formed on 2nd December'2011 as a SPV with 100%shares held by MCL with power generation capacity of 2X800 MW through Pit Head power plantat Basundhara Coalfields.

Joint Venture with OPTCL

MCL has also formed a joint venture Company viz., Neelanchal Power Transmission CompanyPvt. Limited (NPTCPL) on 8th January, 2013 with an objective of carrying out powertransmission business jointly with M/s OPTCL having an equity share holding of 50:50.

Subsidiaries of SECL

SECL has formed two subsidiary companies viz. M/s Chhattisgarh East Railway Ltd on 12thMarch' 2013 and M/s Chhattisgarh East-West Railway Ltd on 25th March' 2013 with 64%holding in each of the subsidiaries for construction of railway lines for evacuation ofcoal.

1. NOTABLE ACHIEVEMENTS

• For the year 2013-14, the Company has achieved a production of 462.42 MT,removed OB of 806.544 MM3 and achieved an off-take of 471.58 MT., with a growth of 2.26%,8.01% and 1.38% respectively compared to last year.

• ECL and BCCL not only achieved their AAP targets of coal production, OB removaland off-take but also recorded a significant growth in coal production and OB removal.SECL has also achieved the AAP target of coal production with 5.11% growth.

• OB removal during this year is noteworthy as it has registered an overall growthof 8.01% over last year. The composite excavation (Coal + OB) in CIL has registered agrowth of 6.7% over last year.

• Coal supply to power utilities during the year is 353.83 MT., which is 94.1% ofthe target and has registered a growth of about 2.4% compared to last year. This dispatchachievement is 86% against the quantity committed under FSA/MoU to power utilities.

• CIL has paid an interim dividend @ of 290% i.e. Rs. 29/-per share of face valueof Rs. 10/-. This is the highest ever dividend paid by the Company till date.

2. FINANCIAL PERFORMANCE

2.1 Financial Results (CIL consolidated)

CIL is one of the largest profit making and tax and dividend paying enterprises. CILand its subsidiaries have achieved an aggregate pre-tax profit of Rs. 22,879.54 crores forthe year 2013-14 against a pre-tax profit of Rs. 24,979.04 crores in the year 2012-13.

(Rs. in crores)

Company (CIL subsidiaries/ CIL standalone) 2013-14 Profit 2012-13 Profit
ECL (+) 1299.28 (+) 1897.18
BCCL (+) 2089.01 (+) 1709.06
CCL (+) 2525.87 (+) 2683.56
NCL (+) 3355.71 (+) 4420.58
WCL (+) 325.86 (+) 428.87
SECL (consolidated) (+) 7202.40 (+) 6290.37
MCL (consolidated) (+) 5429.08 (+) 6202.48
CMPDIL (+) 34.60 (+) 29.77
CIL (standalone) (+) 15420.47 (+) 10338.03
Sub-Total 37682.28 (+) 33999.90
Less: Dividend from Subsidiaries (-) 14406.82 (-) 9038.08
Total (+) 23275.46 (+) 24961.82
Adjustment for deferred revenue income (+) - (+) 18.34
Adjustment for exchange rate variation on Current Account of overseas subsidiary (+) 0.72 (+) (1.12)
Adjustment for waiver of accrued interest of BCCL (396.64)
Overall Profit as per Consolidated Accounts (+) 22879.54 (+) 24979.04

CIL as a group has achieved post tax profit of Rs. 15,111.67 crores in 2013-14(excluding share of minority loss of Rs. 0.04 crore; previous year: Nil) as compared toRs. 17,356.36 crores in 2012-13.

Highlights of performance

The highlights of performance of Coal India Limited including its subsidiaries for theyear 2013-14 compared to the previous year are shown in the table below:

2013-14 2012-13
Production of Coal (in million tonnes) 462.42 452.21
Off-take of Coal (in million tonnes) 471.58 465.18
Sales (Gross) (Rs./Crores) 89374.51 88281.32
Capital Employed (Rs./Crores) Note- 1 74891.87 78984.09
Capital Employed (Rs./Crores)- excluding capital work in progress and intangible assets under development. 70386.60 75488.14
Net Worth (Rs./Crores) (as per Accounts) 42391.86 48460.81
Profit Before Tax (Rs./Crores) 22879.54 24979.04
Profit After Tax (Rs./Crores) 15111.67 17356.36
PAT / Capital Employed (in %) 20.18 21.97
Profit before Tax / Net Worth (in %) 53.97 51.54
Profit after Tax / Net Worth (in %) 35.65 35.82
Earning Per Share (Rs.) (Considering face value of Rs. 10 per share) 23.92 27.63
Dividend per Share (Rs.) (Considering face value of Rs. 10 per share) 29.00 14.00
Coal Stock (net) (in terms of no. of months net sales) 0.72 0.76
Trade Receivables (net) (in terms of no. of months gross sales) 1.11 1.42

Note-1:

Capital employed = Gross Block of Fixed assets (including capital work in progress andintangible assets under development) less accumulated depreciation plus current assetsminus current liabilities.

Transfer to reserves

During the year 2013-14, transfer to various reserves out of CIL (standalone) profitsare as under:-

Transfer to General Reserves - Rs. 1500.85 crores

Transfer to CSR Reserves - Rs. 25.34 crores

Transfer to Sustainable Development Reserves - Rs. 10.19 crores

2.2 Dividend Income and Pay Outs (CIL- standalone)

While the financial statements of both CIL standalone and CIL consolidated arepresented separately, it is only the CIL (standalone) which is listed and is relevant fordividend payment to its shareholders. The dividend to its shareholders are paid out ofCIL's standalone income, the major part of which constitutes the dividend income receivedby it (CIL - standalone) from its five profit

making subsidiaries i.e. CCL, NCL, WCL, SECL and MCL.

The breakup of such dividend (interim + final) received and accounted for during theyear from different subsidiaries are given below:-

(Rs. in crores)

Company (paying subsidiaries)

Dividend Income of CIL (standalone)

2013-14 2012-13
CCL 1009.37 1486.74
NCL 2746.12 1662.05
WCL 194.60 184.04
SECL 3444.63 2984.73
MCL 7012.10 2720.52
Total 14406.82 9038.08

During the year, Coal India Limited (standalone) has paid a total dividend (by way ofinterim dividend) of Rs. 18317.46 crores @ Rs. 29/- per share on 6316364400 number ofEquity Shares of Rs. 10/- each fully paid up. Out of the above total dividend, the shareof Govt of India was Rs. 16485.71 crores and for other shareholders, Rs. 1831.75 crores.(Earlier year - Govt of India - Rs. 7958.62 crores and other shareholders - Rs. 884.29crores)

2.3 Observation of the Statutory Auditors

The Statutory Auditors have given their observations on the standalone accounts of theCompany for the year ended 31st March' 2014. The Auditors' observations in terms ofSection 217(3) of the Companies Act'1956 and Management Explanation are enclosed as

Annexure IV.

3. COAL MARKETING 3.1

(a) Off-take of Raw Coal

Off-take of raw coal continued to maintain its upward trend and reached 471.58 milliontonnes for fiscal ended March 2014, surpassing previous highest figure of 465.18 milliontonnes achieved during the last year, i.e., an increase of 1.4 % over the last year. Theoverall raw coal off-take achieved was 95.8 % of the Annual Action Plan Target.

Company-wise coal off-take:-

The Company-wise target vis-a-vis actual off-take for 2013-14 and 2012-13 are shownbelow:

Figs. in million tonnes

2013-14

2012-13

Growth over last year

Company AAP Target Achieved % Achieved Achieved Abs.
ECL 35.20 36.26 103.0 35.84 0.42 1.2
BCCL 33.20 34.20 103.0 33.04 1.16 3.5
CCL 57.20 52.12 91.1 52.89 -0.77 -1.5
NCL 73.50 72.11 98.1 67.29 4.82 7.2
WCL 44.10 39.94 90.6 41.55 -1.61 -3.9
SECL 124.50 122.03 98.0 121.99 0.04 0.03
MCL 123.30 114.34 92.7 111.96 2.38 2.1
NEC 1.00 0.58 58.0 0.62 -0.04 -6.5
CIL 492.00 471.58 95.8 465.18 6.40 1.4

From the above, it may be seen that ECL and BCCL had not only exceeded their targetsbut also achieved positive growth over last year's off-take. Barring CCL, WCL and NEC allother coal companies registered a positive growth in off-take. Off-take from CCL wasaffected due to i) strike by contractor's workers, dismantling of Purnadih bridge as perthe order of High Court ii) stringent restrictions imposed by State Government to ensureimplementation of permissible carrying capacity causing resentment among the contractorsand their reluctance to execute the contract iii) Naxalite/Extremists restricted loadingfrom Tori siding for a considerable period of time and iv) frequent Bandhs / localagitation. At WCL, unprecedented heavy rain during monsoon had a devastating effect.Damaged roads and bridges, inundation of open-cast mines, badly affected coaltransportation and off-take. Less lifting by MAHAGENCO-Power stations, MPEB-Sarni,HPGCL-Panipat, GEB-Ukai etc. also led to the shortfall.

(b) Sectorwise dispatch of coal & coal products:-

Sector-wise break-up of dispatch of coal and coal products during 2013-14 againsttarget and last year's actuals are given below:-

Figs. in million tonnes

Year

2013-14

2012-13

Growth over Last Year

Sector AAP Target Dispatch % Satn. Actual Abs. %
Power (Util) 376.18 353.83 94.1 345.43 8.40 2.4
Steel * 4.72 3.66 77.5 4.74 -1.08 -22.8
Cement** 7.08 5.45 77.0 6.47 -1.02 -15.8
Fertilizer 2.84 2.29 80.6 2.50 -0.21 -8.4
Others 99.72 106.25 106.5 107.07 -0.82 -0.8
Despatch 490.54 471.48 96.1 466.21 5.27 1.1

* despatch of washed coking coal and raw coking coal for direct feed, blendable coal tosteel plants and to external washeries. ** despatch to cement plants excluding cement cpp.

3.2 Dispatch of coal and coal products by various modes:-

Dispatch of coal and coal products during 2013-14 went upto 471.48 million tonnes from466.21 million tonnes registering a growth of 1.1 %. Overall despatch by non-rail mode hadbeen almost 104% of the target. Growth in despatches via rail mode was 3.3 % whereasoverall non-rail mode it went down by 1.4 % compared to previous year. Movement by MGR wasat par with last year. The performance could have been even better, but for less movementthrough MGR at ECL, NCL, MCL and WCL. Road dispatch of CIL was more than the target set.

Dispatch of coal and coal products by various modes for the years 2013-14 and 2012-13are given below:

(Figs. in million tonnes)

Year

2013-14

2012-13

Growth over Last Year

Mode AAP Target Despatch % Satn. Actual Abs.
Rail 285.76 259.41 90.8 251.11 8.30 3.3
Road 99.12 112.81 113.8 115.68 -2.87 -2.5
MGR 93.24 88.75 95.2 88.77 -0.02 0.0
Other Modes 12.42 10.51 84.6 10.65 -0.14 -1.3
Overall 490.54 471.48 96.1 466.21 5.27 1.1

3. 3 Wagon Loading

Overall wagon loading materialization was 90.3 % of target. This was achieved due tosustained efforts and regular coordination with railways at different levels. The increasein loading over last year was of 6.12 rakes per day. Company wise performance showed thatECL, NCL and SECL had exceeded last year's level of loading and almost achieved theirtarget. Also, Rake loading performance was more than last year at BCCL, WCL and MCL.

(Figs. in Rake/day)

2013-14

2012-13

Growth over last year

Company AAP Target Achieved % Achieved Achieved Abs. %
ECL 18.22 18.02 98.9 17.78 0.24 1.3
BCCL 24.97 22.16 88.7 20.84 1.32 6.3
CCL 34.95 25.21 72.1 27.26 -2.05 -7.5
NCL 20.98 20.88 99.5 18.67 2.21 11.8
WCL 16.99 15.70 92.4 15.16 0.54 3.6
SECL 35.02 34.25 97.8 32.90 1.35 4.1
MCL 58.69 53.51 91.2 50.83 2.68 5.3
NEC 0.87 0.43 49.4 0.60 -0.17 -28.3
CIL * 210.69 190.16 90.3 184.04 6.12 3.3

Note: Due to revision of wagon loading figures submitted by Railway Board, Kolkata andWCL, Nagpur for the year 2012-13 - the loading is shown as 184.04 rakes/day, instead of186.4 rakes/day. The difference was caused due to inclusion of non-CIL loading by Railwaysin the loading figures of WCL which was subsequently corrected by Railways and CIL.

The loading would have been more but for the following reasons:

• Cyclone 'Phailin' followed by devastating rainfall in October' 2013.

• At ECL, regulated lifting by many power utilities like WBPDCL, NTPC, DPL andRGTP-Hissar etc either, due to high stock at TPS end or non-payment of advance coal valuesas per terms of FSA and frequent railway restrictions due to movement of importedrakes/up-country movement.

• At CCL, Naxalite/Extremists restricted loading from Tori siding for aconsiderable period of time; frequent bandhs/ local agitation and regulated lifting byHPGCL power stations.

• At NCL, regulated lifting by HPGCL, RRVUNL and Rajghat TPS and non-payment ofadvance coal values as per terms of FSA by the Power Stations.

• At WCL, less lifting by MAHAGENCO-Power stations, MPEB-Sarni, HPGCL-Panipat,GEB-Ukai etc.

• At SECL, regulated lifting by GEB & RRVUNL.

• At MCL, contractor's workers went on strike at S-3 and S-4 siding of Talcherfield during October'13-January'14 and restriction in transportation and loading activityimposed by State Govt of Odisha from 11.00 AM to 3.30 PM during summer due to excessiveheat.

3.4 Consumer satisfaction

i) In order to ensure enhanced customer satisfaction, special emphasis has been givento quality management. Steps were taken to monitor quality right at the coalface apartfrom bringing further improvements in crushing, handling, loading and transport system.

ii) CIL has built coal handling plants with capacity of about 296 MT per annum so as tomaximize despatches of crushed/sized coal to the consumer.

In addition, washeries at BCCL, CCL, WCL and NCL have adequate crushing/sizingfacilities of about 39.4 million tonnes.

iii) Measures like picking of shale/stone, selective mining by conventional mode aswell as by surface miners, adopting proper blasting procedure/technique for reducing thepossibility of admixture of coal with over-burden materials, improved fragmentation ofcoal etc. are being taken for improving coal quality.

iv) Surface Miners have been deployed for selective mining at some of the mines toimprove the quality of coal. Action is being taken for deployment of more surface minersin other mines where geo-mining condition permits. Already 56 Surface Miners have beendeployed in opencast mines and are working satisfactorily.

v) Joint sampling system is in vogue for major coal consuming sectors e.g. power(utilities as well as captive), steel, cement, sponge iron covering more than 95% of totalproduction of CIL. On overall basis, large consumers having annual contracted quantity of0.4 MT or more and having FSA have been covered under sampling.

vi) From 1st October, 2013, an independent 3rd party sampling and analysis system wasintroduced for more transparency in the system and for smooth operation in all the areasof subsidiary coal companies of CIL. Subsidiaries have procured 121 Bomb-Calorimeters formore accurate and transparent results of analysis of coal samples. The sampling andanalysis are being done in the presence of customers as per provision of FSA at loadingend and based on the results the customers are paying the bills of coal as per analyzedgrades.

The achievement of grade conformity in respect of sampling and analysis had been to thetune of 95.63% (approx.) in respect of supplies to power sector during the joint samplingperiod i.e. from April 2013 to September 2013 and to the tune of 92.63% (approx.) duringthe third party sampling period i.e. from October 2013 to March 2014.

vii) Electronic weighbridges with the facility of electronic printout have beeninstalled at rail loading points to ensure that coal dispatches are made only after properweighment. For this purpose, subsidiaries have installed 169 weighbridges in the RailwaySidings and 536 weighbridges for weighment of trucks. Subsidiaries have also taken actionsfor installation of standby weighbridges to ensure 100% weighment.

viii) 25 Auto Mechanical Samplers are also working in subsidiaries for sampling of coalfor the bulk consumers eliminating biasness in sampling process. Procurement of furtherAMSs is under process.

3.5 Marketing of Coal:

(A) Status of implementation of different provisions under New Coal Distribution Policy(NCDP) is as under:

(i) For power stations, commissioned on or before 31.03.2009, 306 million tonnes ofcoal had been considered to be supplied through legally enforceable Fuel Supply Agreements(FSA) with a trigger level of 90%. The total quantity covered under FSA against theallocation as on March'14 was 306 million tonnes.

Apart from the above, 179 Letter of Assurances has been issued to power plants bysubsidiary companies of CIL, as per the recommendations of various SLC (LT) Meetings,about 426.7 million tonnes of coal. Further, as per Presidential Directives dated16-4-2012, and a revised directive dated 17-7-2013, the list of Power Plants and aggregatecapacity were revised. A total 172 Thermal Power Plants (TPPs) were listed with anaggregate capacity of 78555 MW. Till 31.3.2014, 160 FSAs have been signed with PowerPlants for an aggregate capacity of 72575 MW. However, out of the said capacity, TPPshaving capacity of 56,937 MW have furnished a long term Power Purchase Agreement (PPA) andqualify for coal supply subject to commissioning etc. After a successful meeting with NTPCin July 2013 to resolve the pending FSA issues, signing of FSA with NTPC power plantsappeared in the Presidential Directives have completed for an aggregate plant capacity of13510 MW which included both wholly owned and JV Plants of NTPC.

(ii) In addition, 6 power plants having Pre-NCDP Long Term Linkage (commissioned andappearing in the MOC letter dated 17.02.2012 not having LOA) are drawing coal underFSA/MOU.

(iii) Out of 1208 valid linked units other than power and steel plants with eligibleFSA quantity of 76.24 million tonnes, 875 units had executed FSAs for 58.64 milliontonnes. FSAs of existing consumers were signed in 2008 with tenure of 5 years; many of theFSAs had expired and are under renewal process.

(iv) For supply of coal to SME sector, 8 million tonnes was earmarked for allocation toagencies nominated by the State Govt's/ UT's. 17 states / UT's sent their nomination of 24state agencies for the year 201314 of which 19 state agencies have signed FSAs for 4.08million tonnes and drawing coal accordingly.

(v) After implementation of NCDP, 418 LOAs were also issued to consumers of spongeiron, CPP and cement as per the recommendations of various SLC (LT) meetings for

Futures & Options Quote
Expiry Date :
363.90    [12.90] ([3.42]%)
Instrument: FUTSTK
Expiry Date: 31-Jul-2014
Open Price: 376.55
Average Price: 366.57
No. of Contracts Traded: 7,363
Open Interest: 93,92,000
Underlying: COALINDIA
Market Lot: 1,000
Previous Close: 363.90
Day's High | Low: 377.80 | 362.80
Turnover (Cr.): 269.91
Open Int. Change: 0,23,70,000 ([20.15]% )
Key Information

Key Executives:

R Mohan Das , Director (Personnel)

M Viswanathan , Company Secretary

Nagendra Kumar , Director (Technical)

B K Saxena , Director (Marketing)


Company Head Office / Quarters:

Coal Bhawan,
10 Netaji Subhas Road,
Kolkata,
West Bengal-700001
Phone : West Bengal-91-33-22488099 / West Bengal-
Fax : West Bengal-91-33-22435316 / West Bengal-
E-mail : complianceofficer@coalindia.in
Web : http://www.coalindia.in

Registrars:

Karvy Computershare Pvt Ltd
Plot No 17-24 ,Vittal Rao Nagar ,Madhapur ,Hyderabad-500081

 
Fund Holding
 
 
Better Investment Avenue

Check whether Taxed / Tax free investment avenue is better for you

  Taxed Avenue Tax-Free Avenue
Investment amount (Rs.)  
Tenure of Investment (years)  
Interest earned (% p.a)
Compounded every
Your tax bracket (%)