Bharat Coking Coal Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENTS

Bharat Coking Coal Limited (BCCL), a subsidiary of Coal India Limited (CIL), occupies a significant position in the Indian coal industry and is one of the leading producers of coking coal in the country. The Companys mining operations are primarily concentrated in the Jharia Coalfield of Jharkhand and the Raniganj Coalfield of West Bengal, which contain important coking coal resources and contribute significantly to the countrys coal production.

The coal sector continues to be a cornerstone of Indias economic growth and energy security. Coal remains the primary source of fuel for electricity generation in the country, with the power sector accounting for the largest share of coal consumption. In addition, coal serves as a critical raw material for industries such as steel, cement, fertilizer and other manufacturing sectors. Consequently, demand for coal continues to be driven by growth in power generation, industrial production, infrastructure development and overall economic activity.

BCCL caters to a diversified consumer base comprising power utilities, steel producers, fertilizer units and other industrial consumers. During FY 2025-26, the power sector remained the largest consumer of the Companys coal supplies, reflecting the dominant role of coal in meeting the countrys energy requirements. At the same time, BCCL continues to play a strategic role in supporting the domestic steel industry through production and beneficiation of coking coal.

Coking coal occupies a critical position in the Indian economy as an essential input for steel production. Despite continuous efforts to enhance domestic production, India continues to depend substantially on imports to meet the requirements of the steel sector. During FY 2025-26, coking coal imports increased to 66.33 million tonnes from 57.58 million tonnes in the previous year, highlighting the continuing demand- supply gap in the domestic market. The increasing reliance on imported coking coal underscores the importance of augmenting indigenous production and beneficiation capacity to support the countrys longterm steel manufacturing ambitions.

A significant policy development during FY 2025-26 was the notification of coking coal as a Critical and Strategic Mineral by the Government of India under the Mines and Minerals (Development and Regulation) Act, 1957. The Government of India continues to emphasize self-reliance in critical minerals and raw materials under the vision of Atmanirbhar Bharat. In this context, enhancing domestic availability of coking coal assumes strategic importance for reducing import dependence, strengthening the domestic steel value chain and ensuring long-term resource security. The notification of coking coal as a Critical and Strategic Mineral further reinforces the national focus on increasing indigenous production and beneficiation of coking coal resources.

In line with the national objective of enhancing domestic coal availability and reducing import dependence under the vision of Atmanirbhar Bharat, the Company continued to undertake initiatives for capacity augmentation and modernization of mining operations. During FY 2025-26, production commenced from the PB Project, marking the operationalization of the first discontinued mine under BCCLs asset monetisation initiative through the Mine Developer and Operator (MDO) mode. The project represents an important step towards revival of discontinued mining assets and unlocking additional coal resources through innovative operating models. Further, the Company completed construction of the 2.0 MTPA Bhojudih Coal Washery during the year, which is expected to strengthen its coal beneficiation infrastructure and improve the availability of quality coking coal to consumers.

The Companys operations continue to be influenced by factors such as geological complexities, legacy mine fires, land acquisition challenges, rehabilitation and resettlement requirements, environmental considerations and evacuation infrastructure constraints. Nevertheless, BCCL remains committed to improving operational efficiency, maximizing resource utilization and contributing towards the long-term objective of enhancing domestic availability of coking coal while supporting the countrys energy and industrial growth.

II. OPPORTUNITIES AND THREATS

OPPORTUNITIES (O)	THREATS (T)
\u2022 Availability of un-exhaustive market for a long period.	\u2022 Illegal mining resulting in exposure of coal to air, aggravating spontaneous combustion.
\u2022 Asset monetization of discontinued mines.	\u2022 Scarcity of consumers for sale of reject generated at washeries.
\u2022 Installation of solar power plant.	\u2022 Delay in shifting unauthorised occupants from the mining area.
\u2022 Scope for Coal Bed Methane (CBM) extractions.	\u2022 Inability to establish physical possession of land acquired under LA Act for mining purpose.
\u2022 Opportunity to generate revenue through Mine Tourism.	\u2022 Delay in implementation of Jharia Master Plan, endangering the lives of habitants in vicinity as well as loss of priceless coal reserve in fire beneath.
\u2022 High demand for coking coal as Import substitution under \u201c Atma Nirbhar \u201d Plan of Government of India.
\u2022 Monetization of old washeries under Washery Developer and operator ( \u201c WDO \u201d ) route.

III. OUTLOOK

BCCLs future growth strategy is focused on enhancing operational efficiency, improving coal quality, augmenting production capacity and maximizing value from its resource base through adoption of modern technologies and innovative operating models.

The Company remains committed to strengthening its coal beneficiation infrastructure with the objective of improving the availability and quality of washed coking coal for consumers. Expansion of washing capacity is expected to support the increasing requirement of quality coking coal and contribute towards reducing dependence on imports.

The Company is also pursuing operationalization and monetization of identified discontinued mines/washeries through MDO/WDO models aimed at unlocking additional value from existing infrastructure, improving resource utilization and enhancing long-term operational sustainability.

BCCL will continue to pursue its established strategy of departmental production as well as Hiring of HEMMs in suitable projects. Simultaneously, the Company is undertaking technological interventions through deployment of high-capacity mining equipment and adoption of modern mining methods to improve productivity, enhance recovery and facilitate extraction of otherwise inaccessible reserves.

As part of its long-term mine planning strategy, the Company is progressing with the reorganisation of mining operations to enable scientific and large-scale extraction of deep seated coal resources. Continuous identification and development of new producing patches, optimization of mining infrastructure and efficient utilization of available resources remain key focus areas.

The Company also remains committed to sustainable mining and energy transition initiatives through expansion of renewable energy capacity, efficient resource utilisation and adoption of environmentally responsible mining practices. Further, the Company is pursuing development of Coal Bed Methane (CBM) resources within its leasehold areas, which has the potential to enhance resource utilisation and create additional value in the long term.

While challenges relating to geological complexities, mine fires, land acquisition, rehabilitation and resettlement requirements, environmental compliance and weather-related disruptions may continue to influence mining operations, the Company remains focused on addressing these challenges through efficient mine planning, technological interventions and stakeholder engagement.

Supported by its resource base, experienced workforce, ongoing modernization initiatives and strategic growth projects, BCCL remains committed to strengthening its operational performance and contributing towards the nations energy security, industrial growth and the vision of Atmanirbhar Bharat.

Marketing outlook

From a marketing perspective, the Company expects demand for coal to remain supported by growth in power generation, infrastructure development and industrial activity in the country. BCCL shall continue to focus on improving coal quality and enhancing the availability of quality coking coal and washed coal to meet the requirements of the domestic steel sector. Expansion of washing capacity is expected to improve product quality, strengthen customer satisfaction, enhance value realization and support import substitution efforts. The Company will also continue to focus on customer engagement, supply reliability and strengthening its presence in key consumer sectors through consistent supply of quality coal products.

IV. SEGMENT- WISE AND PRODUCT -WISE PERFORMANCE

The Company operates in a single business segment, viz., coal mining and allied activities. During FY 2025-26, the Company produced 35.52 million tonnes of coal and achieved an offtake of 33.06 million tonnes. Product-wise performance in respect of coking coal, non-coking coal, washed coal and other key operational parameters is presented below.

Particulars	FY 2025-26	FY 2024-25	Growth (%)
Coking Coal Production (MT)	33.70	38.89	-13.35%
Non-Coking Coal Production (MT)	1.82	1.61	13.04%
Total Coal Production (MT)	35.52	40.50	-12.30%
Raw Coal Offtake (MT)	33.06	38.25	-13.57%
Washed Coking Coal Production (MT)	1.61	1.65	-2.42%
Washed Coking Coal Dispatch (MT)	1.58	1.71	-7.60%
Washed Power Coal Production (MT)	3.07	3.16	-2.85%
Washed Power Coal Dispatch (MT)	2.60	2.89	-10.03%
OB Removal (Mcum)	160.92	182.35	-11.75%

Supply of Washed & direct feed coal

Supply of Washed & direct feed coal to the steel sector was 15.82 lakh tonnes in 2025-26 against 17.08 lakh tonnes in 2024-25. This represents a growth of (-) 7.38 % over the last year.

V. RISK AND CONCERNS

1. Our mines and washeries are concentrated in Jharia, Jharkhand and Raniganj, West Bengal and the eventual exhaustion of coal reserves in these areas or our inability to successfully exploit existing reserves may adversely affect our business, results of operations, financial conditions and cash flows.

2. The coal-bearing areas under the Companys leasehold are traversed by critical infrastructure, including major railway lines (D.C Railway line, Main JC Railway line and Adra - Gomoh Railway line), roads and other public utilities. Mining operations in such areas require extensive planning, regulatory approvals and protective measures, which may affect operational flexibility and project implementation timelines.

3. Mining operations are subject to various geological, technical and operational risks, including mine fires, subsidence, water inundation, complex geological conditions, old underground workings and reserve estimation uncertainties. Such factors may affect production, productivity, project implementation and operating costs.

4. Delays in land acquisition, rehabilitation and resettlement of affected families, disputes relating to land records and challenges in obtaining physical possession of acquired land may affect project execution and expansion plans. Discrepancies between Cadastral Survey (CS) and Revisional Settlement (RS) Khatiyan records further compound these issues, resulting in unnecessary legal complications and subsequent delays in the acquisition process.

5. The Company operates in a region affected by legacy mine fires and subsidence. Effective implementation of rehabilitation and resettlement measures under the Revised Jharia Master Plan is important for safeguarding inhabitants residing in vulnerable areas and addressing safety concerns associated with fire-affected and subsidence-prone zones. Challenges in implementation may give rise to safety, social and operational concerns.

6. Dense habitation over coal-bearing areas poses challenges in obtaining statutory permissions for mining activities, including depillaring and blasting operations. Delays in relocation of occupants and unauthorized encroachers may affect extraction plans and operational efficiency.

7. The Companys mining operations depend upon timely availability of explosives, diesel, spare parts, equipment, transportation infrastructure and contractor services. Any disruption in the supply chain, logistics network or contractor performance may adversely affect mining operations and production. Further, mining operations are exposed to risks arising from escalation in the cost of contractual services, fuel, explosives, transportation, equipment maintenance and other operational inputs, which may adversely impact the Companys operating costs and profitability.

8. A significant portion of the Companys revenue is derived from coking coal. Changes in demand from the steel sector, technological changes in steelmaking, increased use of alternative materials or fuels, or adverse market conditions may affect the demand for the Companys products.

9. Mining operations are exposed to environmental risks, evolving regulatory requirements and extreme weather events, including heavy rainfall, which may impact production, overburden removal, coal evacuation and overall operational performance.

VI. DIVERSIFICATION AND VALUE ADDITION CBM PROJECTS

Methane is inherently associated with coal and is generated during the coal formation process. Recovery and utilization of Coal Bed Methane (CBM) provides an opportunity to harness an alternative source of energy, improve resource utilization and support sustainable mining practices. Recognizing this potential, the Company has identified two CBM blocks in the Jharia Coalfield for exploration and development.

• Jharia CBM Block I

This block encompasses an area of 26.55 square kilometers and contains gas reserves estimated at 25,000 million cubic meters. The project is currently in the exploration phase and is being developed through a revenue -sharing model. The block is anticipated to commence production by the fiscal year 2028. During FY 2025-26, drilling of 3 out of 5 test wells has been completed. Upon completion of all 5 test wells, subsequent activities

such as well testing, reservoir simulation, and forecasting of CBM gas production will be carried out under Phase-I.

• Jharia CBM Block II

The block covers an area of 33.21 square kilometres with estimated gas-in-place reserves of 360.50 million standard cubic metres (MMSCM). Following approval of the Project Feasibility Report, preparatory activities for selection of a CBM Developer are underway.

These initiatives underscore our commitment to harnessing CBM as a viable energy source, contribute to diversification of the Companys business portfolio and create long-term value for stakeholders.

Solar Power Projects

With a keen focus on sustainable development and reducing dependency on conventional source of energy, we have been successful in installing roof top and ground mounted solar projects in different locations within our command area. As of March 31, 2026, we have installed and commissioned 27.97 MWp solar power plant including 7.97 MWp roof top projects and 20 MWp Ground mounted projects at different locations. The installed solar power projects have contributed towards reduction in carbon emissions, optimization of energy consumption and savings in electricity costs. These initiatives underscore our commitment to promoting renewable energy and achieving our sustainability goals.

Our rooftop solar power plants generate energy that is directly utilized for our own consumption, reducing our reliance on conventional energy sources and lowering operational costs. For our ground-mounted solar power plants, the generated energy is injected into the grid, and the corresponding energy credits are adjusted in our electricity bills, resulting in cost savings. This approach not only supports our sustainability goals but also enhances our financial performance by optimizing energy usage and reducing carbon emissions.

In line with its renewable energy roadmap, the Company is also progressing with additional solar power projects, including a 25 MW ground-mounted solar power plant at Bhojudih Coal Washery

Monetization of Old Waheries

We aim to expand and modernize our washery infrastructure. We aim to strategically monetize nonperforming mines and old, less efficient coking coal washeries through the WDO model and private sector partnerships, ensuring long-term revenue generation without incurring operating costs and optimizing asset utilization. We are focusing on identifying new patches for production through contractual means, establishing new washeries under the build-operate-maintain model, and renovating existing washeries under the renovate- operate-maintain model.

Further, to enhance the supply of indigenous washed coking coal and reduce reliance on imports for the steel sector, we plan to increase the number and capacity of our washeries. This strategic initiative aims to bolster domestic production, ensuring a steady and reliable supply of high-quality washed coking coal. We have also significantly increased the sale of beneficiated and higher quality coal by modernizing and renovating aging washeries, commissioning new washeries with a combined capacity of 7.00 million tonnes per year, and monetizing old washeries to enhance operational efficiency. We have awarded the renovation contract for the 1.60 million tonnes per year Moonidih coal washery, which will enhance our existing washing capacity. In addition, we have onboarded a private player as washery developer cum operator to re-develop our old Dugdha washery under monetization scheme. It will add into a new revenue stream for our company and at the same time will help to increase the share of our coking coal into steel sector. These expansions in our washery operations are anticipated to enable the supply of higher-grade coking coal, thereby improving product quality and addressing the growing market demand.

VII. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

To ensure regulatory and statutory compliance as well as to provide highest level of corporate governance, our company has a well- established and robust internal control system and processes. A comprehensive delegation of power exists for a smooth decision making. The supervision of operational efficiency is done by internal audit. The Audit committee keeps a watch on the working of internal control system. The accounts of the company are subject to audit by Comptroller and Auditor General of India. In line with the directives of Department of Public Enterprises (DPE), training is imparted to the newly appointed Directors of the company.

VIII. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE FINANCIAL DISCUSSION AND ANALYSIS

During the Financial Year (FY) 2025-26, the Company s financial performance witnessed significant pressure on profitability, primarily driven by challenging market dynamics and lowered operational output.

• Profit Before Tax (PBT): Stood at Rs. 149.18 Crore, representing a decline of 91.24% compared to Rs. 1,702.89 Crore in the previous financial year.

• Net Profit (Profit After Tax): Stood at Rs. 128.28 Crore, reflecting an 89.66% decrease from Rs. 1,240.19 Crore reported in FY 2024-25.

The contraction in margins and profitability during the year under review is attributable to the following primary operational and market factors:

• Lower Operational Volumes: Raw coal production decreased by 12.30%, coupled with a 13.62% decline in the off-take of Raw Coal compared to the previous fiscal year.

• Reduction in Realizations: The Average Sale Price per tonne compressed from Rs. 3433.03 in FY 2024-25 to Rs.3085.76 in FY 2025-26. This reduction was driven by declining International Coking Coal prices and waiver of Performance Incentive (PI) given to the consumers covered under Fuel Supply Agreement due to subdued market conditions.

A detailed discussion on financial performance and analysis is furnished below.

A. Total Income:

Total Income of the Company comprises of Revenue from Operations and other Income. The total income for financial year 2025-26 is Rs. 14,924.26 Crore as against Rs.16,516.29 Crore in the previous year registering a reduction of 9.64%, principally due to decline in income from sale of coal. The analysis of major elements of incomes is detailed below:

Revenue from Operations: Sale of Coal - Product-wise Sale Value earned in FY 2025-26 vis-a-vis FY 2024-25 is tabulated hereunder:

Particulars	FY 2025-26		FY 2024-25		Growth (%)
	Qty. (in Million Te.)	Amt. (Rs. in Crore)	Qty. (in Million Te.)	Amt. (Rs. in Crore)	Qty.	Value
Raw Coal	27.38	10832.93	32.53	12845.92	(15.83)	(15.67)
Washed Coal	1.58	1846.71	1.71	2108.45	(7.60)	(12.41)
Other By Products	3.39	965.14	3.87	1158.74	(12.40)	(16.71)
Total Sales	32.35	13644.78	38.11	16113.11	(15.11)	(15.32)

Other Income:

During the year, other income increased from Rs. 599.08 crore in FY 2024-25 to Rs. 1,279.48 crore in FY 2025-26. The amount includes interest earned on Tax refunds, surplus fund; penalty recovered from contractors/ customers and write back of provisions/liabilities which are no longer required.

B. Expenses

The major elements of expenses are discussed below:

a. Employee Benefits Expense

Employee benefit expenses constitute the largest component in the total cost, and are about 43.61% of the total cost. The employee benefit cost during the year was Rs. 6,443.61 crore as against Rs. 6,542.37 crore in previous year. Primary reason for decline in employee benefit cost is due to higher attrition of manpower.

b. Contractual Expenses

Contractual expenses primarily consist of transportation charges for coal, sand and other materials, wagon loading operations, hiring charges for Heavy Earth Moving Machinery engaged for coal extraction and overburden removal activities and other miscellaneous works such as for haul road maintenance at mines and temporary lighting etc.

Contractual expenses during the year was Rs. 4,482.20 crore as against Rs. 4,311.51 crore in previous year, i.e. increased by 3.96%. The spike in contractual expenses was largely due to factors such as working in higher leads as compared to the previous year, award of new contracts, wages escalation, increase in washing charges, etc.

c. Finance Costs _

(Rs. in Crores)

Particulars	For the year Ended
	31 st March 2026	31 st March 2025
Interest Expenses
Unwinding of discount*	74.16	71.89
Other Borrowings Cost	84.48	0.60
Total	158.64	72.49

Rs.Unwinding of discount is an accounting process that increases the carrying amount of a discounted liability over time to reflect the passage of time and the approach of maturity. It treats the difference between present value and future value as a finance cost, recorded annually as interest expense. The present unwinding of discount expenses is towards Mine Closure Liability and Right of Use Assets created as Per Ind AS 119.

Other borrowing cost is the amount of interest expenses towards Working Capital Demand Loan availed by the Company during the Year.

d. Stripping Activity Adjustment

As per the Material Accounting Policy Information (Refer 2.19) on Stripping Activity, Stripping Activity Adjustment is to be calculated for mines with rated capacity of one million tonnes and above per annum. Cost of Stripping during the production phase can give rise to two benefits, the extraction of coal in the current period and improved access to coal which will be extracted in future periods. Presently, such adjustment is being done in the following mines:

Name of the Mine	As at March 31, 2026
	Standard Stripping Ratio	Current Stripping Ratio	Coal (LT)	OBR (L.CuM)
Amalgamated Muraidih Phularitand Colliery (AMPC), Barora	2.01	1.21	31.22	37.76
Amalgamated Block-II OCP, Block-II	2.80	1.90	49.29	93.77
Mudidih, Sijua	4.17	5.38	7.46	40.10
Sendra bansjora, Sijua	5.41	2.92	28.44	82.93
Tetulmari, Sijua	2.99	0	0	0.01
ADIC, Kusunda	4.05	4.64	8.32	38.66
East Basurriya, Kusunda	4.07	5.18	1.69	8.78
Ena, Kusunda	3.06	2.10	18.48	38.77
Amal. Bera Dob Kuya & Ghanoodih, Bastacolla	8.36	7.29	3.87	28.22
Rajapur OCP, Bastacolla	9.21	3.92	3.23	12.67
Bastacolla OCP, Bastacolla	5.59	5.21	20.06	104.60
Kujama, Lodna	4.20	10.75	11.34	121.94
Amalgamated Joyrampur, Lodna	16.72	20.57	8.08	166.38
NTST MDO, Lodna	3.70	4.66	69.33	323.28
Bhowra North & South, EJ Area	7.23	10.03	17.52	175.72
East of Damagoria (Kalyaneshwari), C V Area	3.81	11.80	0.60	7.09

e. Other Expenses

During the year, other expenses was Rs.4,462.29 crore as against Rs. 4,000.31 crore in previous year i.e. increased by 11.55%, mainly due to increase in expenses on Rates & Taxes, Security expenses, Provisions and other social and welfare expenses in the current year.

C. CASH FLOWS (Summarized)

(Rs. in Crores)

Particulars	For the year ended 31 st March
	2026	2025
Opening Cash & Cash equivalents	167.54	326.31
Net cash flow from operating activities	(640.64)	626.91
Net cash flow from investing activities	(309.59)	(822.80)
Net cash flow from financing activities	1149.78	37.12
Closing Cash & Cash equivalents	367.09	167.54
Change (net increase/ decrease) in Cash & Cash equivalents	199.55	(158.77)

D. Net Worth: The net-worth of the Company as at 31.03.2026 stood at (+) Rs. 5835.29 crore.

E. The Key Financial Ratios are deliberated hereunder:

Ratio	For the Year ended March 31, 2026	For the Year ended March 31, 2025	Variation %	Reason(s) for Variation
Debtors Turnover Ratio (times)	5.56	9.59	(41.99)	The ratio has deteriorated in view of the enhancement in the balance of trade receivables during the year.
EBITDA as a percentage of Total Income (%)	5.26	14.27	(63.14)	The drop in the ratio primarily attributes to the drop in Current year \u2019 s Profit compared to the last year.
PAT as a percentage of Total Income (%)	0.86	7.51	(88.55)
Return on average capital employed (ROCE) (%)	5.03	30.13	(83.31)	The erosion in ROCE reflects the dual impact of substantial reduction in Earnings Before Interest and Taxes (EBIT) alongside a widening capital base.
Return on Net Worth (%)	2.07	20.83	(90.06)	This decline is directly attributable to the nominal net profit generated in FY 2025-26 compared to the previous year.
Trade receivables as number of days of Revenue from operations	67	34	97.06	The value of Trade Receivables has increased, whereas the Revenue from Operations has gone down during the year, thereby affecting the ratio adversely.
Current ratio	0.93	1.19	(21.85)	The drop in the ratio is mainly due to sharp increase in the Current Liabilities at the end of the year.

IX. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES, INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

This has been covered in the main report.

X. ENVIRONMENTAL PROTECTION AND CONSERVATION, TECHNOLOGICAL CONSERVATION, RENEWABLE ENERGY DEVELOPMENTS, FOREIGN EXCHANGE CONSERVATION.

This has been covered in the main report.

XI. CORPORATE SOCIAL RESPONSIBILITY

A separate annexure has been there towards the CSR.