Economics Project:

COAL INDIA LTD:

About Us

Indias Energy Scenario & Coal

India is currently among the top three fastest growing
economies of the world. As a natural corollary India's
energy needs too are fast expanding with its increased
industrialization and capacity addition in Power
generation. This is where 'Coal' steps in. In India coal is
the critical input for major infrastructure industries like
Power, Steel and Cement.


Coal is the most dominant energy source in India's
energy scenario.
Coal meets around 52% of primary commercial
energy needs in India against 29% the world over.
Around 66% of India's power generation is coal
based.
India is the 3rd largest coal producing country in the
world after China and USA.

Coal India Limited at a glance

Coal India Limited (CIL) as an organized state owned
coal mining corporate came into being in November
1975 with the government taking over private coal
mines. With a modest production of 79 Million Tonnes
(MTs) at the year of its inception CIL today is the single
largest coal producer in the world. Operating through
81 mining areas CIL is an apex body with 7 wholly
owned coal producing subsidiaries and 1 mine planning
and consultancy company spread over 8 provincial
states of India. CIL also fully owns a mining company in
Mozambique christened as 'Coal India Africana
Limitada'. CIL also manages 200 other establishments
like workshops, hospitals etc. Further, it also owns 26
technical & management training institutes and 102
Vocational Training Institutes Centres. Indian Institute of
Coal Management (IICM) as a state-of-the-art
Management Training 'Centre of Excellence' - the
largest Corporate Training Institute in India - operates
under CIL and conducts multi disciplinary management
development programmes.

CIL having fulfilled the financial and other prerequisites
was granted the Maharatna recognition in April 2011. It
is a privileged status conferred by Government of India
to select state owned enterprises in order to empower
them to expand their operations and emerge as global
giants. So far, the select club has only five members out
of 217 Central Public Sector Enterprises in the country.

Unmatched Strategic Relevance


1. Produces around 81.1% of India's overall coal
production


2. In India where approximately 52% of primary
commercial energy is coal dependent, CIL alone
meets to the tune of 40% of primary commercial
energy requirement


3. Commands nearly 74% of the Indian coal market


4. Feeds 82 out of 86 coal based thermal power
plants in India


5. Accounts for 76% of total thermal power
generating capacity of the Utility sector


6. Supplies coal at prices discounted to international
prices


7. Insulates Indian coal consumers against price
volatility


8. Makes the end user industry globally competitive
Thus, plays a key role in "India Growth Story" and
making India incorporate globally competitive.

Mission of Coal India Limited

To produce and market the planned quantity of coal and
coal products efficiently and economically in an eco-
friendly manner with due regard to safety, conservation
and quality.

Corporate Structure and Subsidiary Companies


Coal India is a holding company with seven wholly
owned coal producing subsidiary companies and one
mine planning & consultancy company. It encompasses
the whole gamut of identification of coal reserves,
detailed exploration followed by design and
implementation and optimizing operations for coal
extraction in its mines. The producing companies are:

1. Eastern Coalfields Limited (ECL), Sanctoria, West
Bengal



2. Bharat Coking Coal Limited (BCCL), Dhanbad,
Jharkhand



3. Central Coalfields Limited (CCL), Ranchi, Jharkhand



4. South Eastern Coalfields Limited (SECL), Bilaspur,
Chattisgarh



5. Western Coalfields Limited (WCL), Nagpur,
Maharashtra



6. Northern Coalfields Limited (NCL), Singrauli, Madhya
Pradesh



7. Mahanadi Coalfields Limtied (MCL), Sambalpur,
Orissa



8. Coal India Africana Limitada, Mozambique



9. The consultancy company is Central Mine Planning
and Design Institute Limited (CMPDIL), Ranchi,
Jharkhand.
North Eastern Coalfields (NEC) a small coal producing
unit operating in Margherita, Assam is under direct
operational control of CIL.

Coal India's major consumers are Power and Steel
sectors. Others include Cement, Fertiliser, Brick Kilns,
and small scale industries.

MoU Excellence

For previous three consecutive years CIL has bagged
'Excellent' rating in its Memorandum of Understanding
(MoU) - a negotiated contract between Government and
CIL Management - for performance evaluation on key
physical and financial parameters.

Production and Growth

Produces over 400 Million Tonnes of Coal annually.
Coal production ending Financial Year 2011 was 431.32
Million Tonnes (MTs). CIL's dynamic production
momentum is evident in the fact that in recent years, CIL
leaped from 300 MTs mark achieved in 2003-04 to 400
MTs (2008-09) in a time span of 5 years. It took CIL 12
years to cross the 300 MTs production mark from that of
200 MTs achieved in 1991-92. CIL Is targeted to
produce 452 MTs FY ending 2012.

Two of the subsidiary companies of CIL South Eastern
Coalfields Limited and Mahanadi Coalfields Limited are
in the elite club of 100 MTs coal producing companies
which number only a few worldwide.

Acquiring assets abroad

It is becoming increasingly evident that domestic coal
demand is far outstripping the indigenous production in
India. The gap between demand and supply is ever
expanding. Especially so in the wake of increased
capacity addition in power sector which predominantly
coal dependent.

In spite of best efforts, realistically CIL would not be able
to satiate growing coal demand. Letters of Assurance
(LoA) issued so far are already in excess of CIL's
production. Present analysis indicate that there would be
a shortage of 350 MTs of coal by 2016-17. To meet this
need coal import is inevitable.

CIL has taken it upon itself, in the interest of meeting the
country's energy requirement, and is foraying into
foreign shores for acquisition of coal properties. For the
purpose CIL has adopted a three pronged approach.
Acquisition of coal properties directly on its own; through
equity participation with coal mining companies abroad
and through long term coal off-take contracts.


Transparency Initiatives
Introduced e-auction for selling coal to any consumer
from any location in a transparent manner.
Introduced Integrity Pact in High Value Procurement.
e- procurement introduced for speeding up purchase
of vital inputs
Employee Welfare& CSR

Pursues a structured CSR policy around coal mining
areas to improve quality of life with community
consensus and inclusive participation



Mobile Dispensaries and wellness clinics introduced
on a large scale.



Tele-medicine facilities introduced in central
hospitals.



Provides medical services to employees, their
families and local populace through 86 fully equipped
hospitals having 5835 beds.



Employs 1524 specialist Doctors.



Runs 423 dispensaries and has 640 Ambulances.



Provides potable water to about 2.3 million populace
in remote corners of CIL's areas of operation



Supports 536 schools under different categories -
Project Schools (55); Privately managed Schools with
grant packages (284); Private Committee Managed
Educational Institutes (72) and other schools where
occasional grants are given (125).



Introduced 'Coal India Scholarships' for 100 Below
Poverty Line students plus 25 wards of land losers in
government engineering and medical colleges.
Scholarship covers education, hostel and mess
charges



Meets the entire cost of wards of workmen securing
admission in government engineering and medical
colleges



Committed to generate employment opportunities for
people in mining areas by providing vocational
training.



The company Pursues 'Mining with a human face'
through socially sustainable inclusive model of growth
by making Project Affected People stakeholders in
the decision making process for their livelihood.



Medical facilities extended to nearby communities in
fully equipped company hospitals.



Mobile dispensaries and Tele-medicine facilities
meant for employees also extended to nearby village
populace.

(Figures are as of April 2011)
Care for Environment

One of the inherent tendencies of coal mining is
degradation of the land and environment. CIL constantly
addresses the impact of mining activities across
environmental and social issues. Eco-friendly mining
systems have been put in place in all of its mining areas.
To make environmental mitigation measures more
transparent, CIL introduced state-of-the-art Satellite
Surveillance to monitor land reclamation and restoration
for all opencast projects.

Coal India has made afforestation over an area of
around 32,000 Hectares while the total forest area
degraded due to mining operation is around 12,800
Hectares, which means, for every hectare of forest land
degraded, CIL has made plantation in 2.5 Hectares of
land.

Committed to minimize the adverse impact of coal
mining on environment through well structured
Environment Management Plans and sustainable
development activities.

As a part of 'Clean & Green' programme, massive
plantation has been taken up by CIL wherever land is
available. CIL has till date planted over 73 million trees.

A positive result of this effort towards improvement of
environment through massive plantation undertaken in
Singrauli Coalfields since 1985, is such that the analysis
for the period 1985-1995 and 1996-2002 carried out by
Conservator of Forest indicates that the annual average
maximum temperature in Singrauli has decreased by
0.4oC while the annual average rainy days increased by
11.2 days and average annual rainfall has increased by
105.6 mm.

CIL has started integration of Environment Management
System (ISO:14001) with Quality Management System
(ISO:9001) and till date have successfully achieved
certification of 53 of its projects. This integration is being
extended to all mines in phases.


History

History and Formation of Coal India Limited

With dawn of the Indian independence a greater need
for coal production was felt in the First Five Year Plan.
In 1951 the Working Party for the coal Industry was set
up which included representatives of coal industry,
labour unions and government which suggested the
amalgamation of small and fragmented producing units.
Thus the idea for a nationalized unified coal sector was
born. Integrated overall planning in coal mining is a
post-independence phenomenon. National Coal
Development Corporation was formed with 11 collieries
with the task of exploring new coalfields and expediting
development of new coal mines.

Factors which led up to Nationalization of Coal Industry
in India

Nationalization of coal industry in India in the early
seventies was a fall out of two related events. In the
first instance it was the oil price shock, which led the
country to take up a close scrutiny of its energy options.
A Fuel Policy Committee set up for this purpose
identified coal as the primary source of commercial
energy. Secondly, the much needed investment needed
for growth of this sector was not forthcoming with coal
mining largely in the hands of private sector. The
objectives of Nationalization as conceived by late Mohan
Kumaramangalam were; Conservation of the scarce coal
resource, particularly coking coal, of the country by
Halting wasteful, selective and slaughter mining.



Planned development of available coal resources.



Improvement in safety standards.



Ensuring adequate investment for optimal utilization
consistent with growth needs.



Improving the quality of life of the work force.

Moreover the coal mining which hitherto was with
private miners suffered with their lack of interest in
scientific methods, unhealthy mining practices etc. The
living conditions of miners under private owners were
sub-standard.

Formation of Coal India Limited

With the Government's national energy policy the near
total national control of coal mines in India took place in
two stages in 1970s. The Coking Coal Mines (Emergency
Provisions) Act 1971 was promulgated by Government
on 16 October 1971 under which except the captive
mines of IISCO, TISCO, and DVC, the Government of
India took over the management of all 226 coking coal
mines and nationalised them on 1 May, 1972. Bharat
Coking Coal Limited was thus born. Further by
promulgation of Coal Mines (Taking over of
Management) Ordinance 1973 on 31 January 1973 the
Central Government took over the management of all
711 non-coking coal mines. In the next phase of
nationalization these mines were nationalized with effect
from 1 May 1973 and a public sector company named
Coal Mines Authority Limited (CMAL) was formed to
manage these non coking mines.

A formal holding company in the form of Coal India
Limited was formed in November 1975 to
manage both the companies.

Major Events and Milestones :

2011-12 Maharatna Status

Coal India Limited was granted
the 'Maharatna' status on 11 April, 2011 by
the Government of India thus becoming only
the 5th PSU in the country, of a total of 215
Central Public Sector Enterprises (CPSEs), to
have been conferred with this status.
Government of India has introduced
the Maharatna scheme in February 2010 for
Central Public Sector Enterprises, in order to
empower the mega CPSEs to expand their
operations and emerge as global giants. So
far, the select club has only five members.
The objective of Maharatna is to delegate
enhanced powers to the Boards of the
identified large Navratna CPSEs, fulfilling
the specified criteria, to facilitate expansion
of their operations both in domestic as well as
global markets.



Coal India joins SENSEX

Coal India made it to the 30-stock Sensex, on
8 August 2011, globally considered to be the
barometer of the Indian economy, in short
span of nine months since its listing on 4
November 2010. No other company has made
it to the index in such a short time. And then
Coal India's raise to the top came in just
seven trading sessions since its entry to
SENSEX. This is considered to be a
remarkable accomplishment.



Most Valued Company in the country

On 17 August 2011, Coal India emerged as
the Most Valued Company in the country in
terms of Market Capitalization - the pinnacle
of success every business entity dreams of
and aspires for. The company's value stood at
a whopping Rs.2,51,296 Crores. What made
the achievement all the more significant was
that a public sector company could attain
such lofty heights.



CMPDI in a gas recovery project

Central Mine Planning and Design Institute
(CMPDI) the Ranchi based mine consultancy
subsidiary of Coal India Limited has been
identified for participation in a Green House
Gas recovery from coal mines and un-
mineable coal beds and conversion to energy
(GHG2E) - an EU funded Research Project
from India along with Indian Institute of
Technology, Kharagpur.

The basic objective of the project is to
contribute to global greenhouse gas reduction
by controlling methane emission from coal
mines and maximizing utilization of produced
methane. Moonidih and Sudamdih mines of
BCCL have been considered for taking up
this research project. The total time schedule
for the project is 42 months. Officials from
CMPDI participated in the kick-off meeting
held in Slovakia from 6th - 9th Oct.'11. A
team comprising of Prof. Sevket Durucan of
Imperial College of Engineering, London and
Prof. K.Pathak of IIT, Kharagpur and other
representatives of both the institutions visited
CMPDI on 16th Nov 2011 and the matter was
discussed in details regarding the
implementation of the project. The team
along with CMPDI officials also visited
Moonidih mine and BCCL for detailed
discussions. CMPDI has received an advance
payment of EURO 47,867.35 for the Project.



Finalizes National Coal Wage Agreement
IX in record time

Coal India Limited (CIL) on 31 January 2012,
finalized the wage agreement for its 3.63
Lakh strong non-executive work force by
giving a 25% increase on gross wages as of
30 June 2011. The wage hike that would be
effective retrospectively from 1 July 2011 is
for a five-year period. With the conclusion of
the wage negotiation, Coal India for the
second time becomes the first Central Public
Sector Undertaking in the country to
successfully finalize the wage pact. The
NCWA IX was concluded in a record time of
only 6 months since the formation of JBCCI
in August 2011. Never in the history of CIL
was a wage agreement concluded so swiftly.
2010-11 Coal India Limited signed a Memorandum of
Understanding (MoU) Ministry of Coal on
31st March, 2011 - for its key performance
areas for the fiscal 2011-12. As per the MoU
for the fiscal 2011-12, CIL's targeted
production and coal off-take have been fixed
at 452.00 Million Tonnes (MTs) and 454.00
MTs respectively for attaining an 'Excellent'
rating. Incidentally for previous three fiscal
years i.e 2007-08, 2008-09 & 2009-10 CIL
was rated 'Excellent'.


Under the present MoU for 2011-12 special
emphasis on Research & Development,
Corporate Social Responsibility, Sustainable
development & Corporate Governance have
been made as major thrust areas. To attain the
targeted off-take, CIL has sought 175
rakes/day for 2011-12 as against the average
availability of 156.8 rakes/day & 161.9
rakes/day during previous and current fiscal
years . Average growth of coal movement
through Rail is only around 2 % during the
last 3 years whereas CIL has envisaged a
growth of around 13.5 % through rail for
achieving above target.
Since last year (2010-11) expenditure on CIL
R&D activities has taken a quantum jump
from 2009-10 level of around Rs 15 Crores
annually to Rs.30 crores. CIL has also
stepped up its target for expenditure on CSR
activities in line with DPE's guideline.


Coal India Limited bagged a prestigious first
ever international award in Geneva on 7
March 2011. CIL was conferred with
the "Century International Quality ERA
Award (CQE)" in the Gold Category in
recognition of commitment to Quality,
Leadership, Technology and Innovation. It
was stated that Coal India represents success
for India in the Business world. The awards
were given by Business Initiative Directions
(BID) - a leading private organization focused
on the Quality Mix Plan.



Coal India Limited signed a Memorandum of
Understanding with The Shipping
Corporation of India Limited in December
2010 for promoting a Joint Venture Company
(JVC) In order to create comprehensive end-
to-end logistic solution from load port to
consuming end. Currently imported coal is
supplied by both private and PSU players at
consuming ends, particularly to power
stations, with comprehensive quality and
quantity assurance, whereas, in case of
indigenous coal, CIL's term of sale is Free on
Rail at Colliery

Primary objective of the JVC are


1. Owning/chartering of vessels



2. Draft surveying



3. Inspection of cargo



4. Stevedoring at unloading port in India
including unloading of vessels, customs
clearance, shore clearance, and stacking



5. Indenting wagons from railways, loading of
wagons, quality analysis and delivery of
coal at power stations

4th November was CIL share was listed at
Rs.291/- and closed over Rs.342/- on the first
day of trading. Most importantly, a national
asset was offered to public as 'peoples'
ownership' in PSUs.



21 October 2010, the day CIL's IPO closed,
would be etched as a historic event in the
annals of Coal India Limited. The day
unraveled the value and the true potential of
CIL. Innumerable road shows involving count
less man hours of effort across the country
and in US, Europe markets had resulted in the
grand success of CIL's IPO.

CIL's IPO the largest so far in Indian capital
market was over-subscribed 15.3 times. The
resounding success of record shattering result
of the company's public offer with the
aggregate funds flowing amounted to
Rs.2,35,276.55 crores which was so far
unheard of in the Indian capital market. The
over-subscription of the issue happened in all
the three major segments i.e. Qualified
Institutional Buyers (QIB), High Networth
Individuals (HNI) and retail. The QIB for
which there was a reservation to the extent of
50% of the net issue of the shares, the over-
subscription was as much as 24.62 times.
Around 784 QIB investors had put in over US
dollar 38 billion i.e. Rs.1,71,469.64 crores
which by itself is also an all time high in the
history of Indian IPO. In the retail segment
nearly 16.36 lakhs applications were received
- the highest among all PSU IPOs so far
amounting to Rs.63,639.26 Crores. This is
also the highest so far in the Indian capital
market. Interestingly, the foreign investors
alone had put in around US $ 27 Billion
which is equal to first ten months of FII
investment in India this year.



CRISIL the leading credit rating agency in
the country has assigned maximum grading of
5 to CIL's proposed IPO - the best for any
public sector. The grading indicates that the
fundamentals of the IPO are strong compared
other listed securities in the country.
2009-10
Award of the Scope Excellence Award to our
Company by the Standing Conference of
Public Enterprises for the year 2007-08.
Establishment of Coal India Africana
Limitada, a foreign subsidiary in
Mozambique;
Conversion of our Company into a public
limited company.
Award of 'Mini Ratna' status by the
Department of Public Enterprises, GoI, to
CMPDIL.
Receipt by our Company of a composite
score of 1.47 and rating as "excellent" for
the year 2007-2008 by Department of Public
Enterprises, Ministry of Heavy Industries &
Public Enterprises, GoI.
2008-09
Award of 'Navratna' status to our Company
by the Department of Public Enterprises,
GoI, for our operational efficiency and
financial strength, which affords greater
operational freedom and autonomy in
decision making.
Overall production of coal by our Company
and our Subsidiaries, crossed 400 million
tonnes.
2007-08
Award of 'Mini Ratna' status by the
Department of Public Enterprises, GoI, to
CCL.
2006-07
Award of 'Mini Ratna' status by the
Department of Public Enterprises, GoI, to
our Company and to MCL, NCL, SECL and
WCL.
Decline in debt as a percentage of net worth
from 66 % in 2001-2002 to 10 % in 2006 -
2007.
2005-06
Rating of 'AAA/Stable', indicating highest
degree of safety with regard to timely
payment of interest and principal, awarded
by CRISIL in respect of the Rs. 250 million
bond programme of our Company.
Introduction of sale of coal through 'e-
auction method';
ECL and BCCL reported profit of Rs. 3,638
million and 2,026.67 million in Fiscal 2006.
2003-04
Overall production of coal by our Company
and our Subsidiaries crosses 300 million
tonnes.
2001-02
Laying down of a minimum internal rate of
return of 12% at 85% capacity utilization as
cut off for the development of a project.
1997-98
Corporatization of the financial flow between
our Company and Subsidiaries, such that
our Company is to receive only dividends
under applicable policy from our Subsidiaries
and the corpus of our Company was to be
utilized to provide strategic support to a loss
making entity only for, inter alia,
maintaining their productive capital assets.
Sanction of loan of USD 1.03 billion from the
World Bank and the Japanese Bank for
International Co-operation for implementing
24 highly viable open case projects with
global sourcing of equipments, of which
USD 484.40 million was availed during the
period between Fiscal 1998 to Fiscal 2004.
1996-97
Rating of 'A+', indicating adequate safety
with regard to timely payment of interest
and principal, awarded by CRISIL in respect
of the Rs. 4,000 million bond issue by our
Company.
Adoption of financial viability as the basis for
approval of coal development projects.
Discontinuation of retention prices scheme
and the Coal Price Regulation Account
(CPRA), with the deregulation in prices of
certain grades of coal.
1995-96
Approval of a financial restructuring package
by the Government, whereby Rs. 8,917
million of interest liability was waived, Rs.
9,041.8 million of plan loan repayment
arrears was converted to preference equity
and Rs. 4,326.4 million of non plan payment
arrears were allowed a moratorium for
repayment and interest accrual for a period
of three years, to be repaid in three equal
instalments.
A profit of Rs. 6,116 million in Fiscal 1996
was earned by our Company.
1992-93
Formation of MCL as our Subsidiary to
manage mines Talcher and IB valley in the
state of Orissa.
1991-92
Uptrend of profit started in 1991 and our
Company earned a profit of Rs. 1,670
million in Fiscal 1992.
Overall production of coal by our Company
and our Subsidiaries crossed 200 million
tonnes.
Fixing of coal prices once a year to
compensate for increase in price of inputs
on a normative cost basis, and adoption of
the escalation formula prescribed by the
Bureau of Industrial Cost and Prices
("BICP").
1987-88
'Blasting Gallery Method' introduced at East
Katras mine under BCCL and Chora mine
under ECL.
1985-86
Formation of NCL and SECL as Subsidiaries
of our Company, to manage certain mines
managed by WCL and CCL.
1981-82
Introduction of retention prices of coal by
amending the Colliery Control Order, 1945
by notification dated March 31, 1982, in
respect of our Subsidiaries.
1980-81
Construction of five new washeries:
Moonidih washery, Ramgarh washery,
Mohuda washery, Barora washery, Kedla
washery.
Overall production of coal by our Company
and our Subsidiaries crossed 100 million
tonnes.
1979-80
Construction of the low temperature
carbonized plant started in Dankuni Coal
Complex.
The pricing policy of CMPDIL was reviewed
to ensure that the company was working on
a commercial line instead of working on "no
profit no loss" basis.
1975-76
Change of name of our Company to 'Coal
India Limited'.
Incorporation of CMPDIL, ECL and WCL, and
formation of BCCL, CCL, CMPDIL, ECL and
WCL, as our Subsidiaries.
1973-74
Nationalization of coal mines, in order to
provide for a higher growth in coal sector to
meet the growing energy needs of the
country.
Incorporation of our Company as 'Coal
Mines Authority Limited'
.




Policies


Sports policy of CIL and its Subsidiary Companies


Corporate Governance Manual


New Code for Uniform System of Maintenance, Control and
Verification of Coal Stock in all Mines of CIL


Uniform Deposit Policy for CIL and its subsidiaries


Memorandum and Amended Articles of Association of Coal India
Limited

Memorandum of Association of Coal India Limited
Amended Articles of Association of Coal India Limited

New R&R policy of CIL 2012


CIL's Corporate Environmental Policy


Coal India Whistle blower policy 2011


CIL's Policy for Corporate Social Responsibility (CSR) - Modified


CILs Policy on Publicity / Advertisement and Grant


CILs Safety Policy


CILs Marketing Policy


CILs Policy on Investment of Surplus Fund