Description
It explains about Industry Trends in Indian mining industry, PEST Analysis of mining Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Coal India, it's Finance performance, SWOT analysis of Coal India and Various marketing Strategies employed
Company Analysis: Coal India Ltd. Industry Analysis:
Indian Mining Industry India is endowed with significant mineral resources. India produces 89 minerals out of which 4 are fuel minerals, 11 metallic, 52 non-metallic and 22 minor minerals. In India, 80% of mining is in coal and the balance 20% is in various metals and other raw materials such as gold, copper, iron, lead, bauxite, zinc and uranium. India with diverse and significant mineral resources is the leading producer of some of the minerals. The total value of mineral production was Rs. 568070 million in 2000-2001, of which the value of minerals other than petroleum and natural gas was Rs. 306751 million. The metallic production is accounted for by iron-ore, copper-ore, chromite and/or zinc concentrates, gold, manganese ore, bauxite, lead concentrates. Amongst the non-metallic minerals, more than 90 percent of the aggregate value is shared by limestone, magnesite, dolomite, barytes, kaolin, gypsum, apatite & phosphorite, steatite and fluorite. India is the world's largest producer of mica blocks and mica splittings. With the recent spurt in world demand for chromite, India has stepped up its production to reach the third rank among the chromite producers of the world. Besides, India ranks 3rd in production of coal & lignite and barytes, 4th in iron ore, 6th in bauxite and manganese ore, 10 in aluminium and 11 th in crude steel in the World. Over 1.1 million people are employed in the Indian mining industry. With over 2,326 private and 292 public operating mines in the country, minerals form 16 percent of India's exports. Coal Mining The majority of the energy requirement in India is met by coal, largely mined in the eastern and the central regions of the country. In 2004-05, the total coal production in the country was around 350 million MT and majority of it catered to the core sectors of power, steel and cement. Inspite of various policy initiatives to diversify the fuel mix, it is becoming increasingly evident that coal will continue to play the major role in sustaining the growth momentum of India. Based on estimates, the consumption of coal is projected to rise by nearly 40 percent over the next five years and almost to double by 2020. However, in the recent past, the coal sector in the country has come under pressure over its inability to meet demand (both planned and unplanned) of the user industries. By Government's own estimates, coal production will lag behind demand by about 100 million MT as of 2012 and by 250 million MT by 2020.
Major players in coal mining Name of Company Production 2004 (MMT) 306 34 21 361
CIL (Public Sector) SCCL (Public Sector) Others Total
Note: Excludes NLC production of lignite
Type-wise and Category-wise coal resources of India as on January 1, 2005 (in Million Tonnes): Type Coal of Proved Indicated Inferred Total
(A) Coking
rime Coking -Medium Coking 4614 11417 699 11765 1889 5313 25071
-SemiCoking Sub-Total Coking (B) NonCoking*:Total (Coking & NonCoking)
482 16513 76447 92960
1003 13467 103623 117090
222 2111 35686 37797
1707 32091 215756 247847
PEST Analysis: Political Factors
?
Difficulty in obtaining clearances and leases from the state governments. There are various clearances which need to be obtained from different ministries stated below which is a cumbersome and time consuming process:
? ? ? ? ? ? ? ?
Department of Mines Indian Bureau of Mines Goa State Pollution Control Board Geological Survey of India Ministry of enviromental and forests Central Board of Excise and Customs Department of Heavy Industry Ministry of labour
?
The contribution of iron ore to inflation Domestic inflation has also been rising since December 2007. The iron and steel products constitutes 3.64 per cent of the wholesale price index (WPI). Hence, controlling the sharp rise in domestic steel prices, and thereby containing inflation, had become a priority for the government. The government had since been taking measures to soften the iron ore prices.
?
Government’s approach of giving priority to the domestic players To curb the increasing pressure on the domestic steel industries due to increasing global prices after recession, the Government used duties and royalty as tools to keep the supplies in the domestic market. An ad valorem duty of 15% was imposed on all grades of ore export in June 2008, as against a specific duty applicable earlier.
Economic Factors
?
The fluctuations in the exchange rates impact the performance of the mining Industry Indian iron ore industry thrives on exports. Goa exports 96% of its iron ore production and 84% of revenues is accounted for by exports to China.
?
As per mining legislation of India there is no restriction on foreign equity holdings in mining sector companies registered in India. China being the highest buyer of iron ore, it is the key driver of the global iron ore industry. Its economic scenario impacts the entire industry. Change in the scale of steel production The free on board (FOB) price of reference grade Indian iron ore dropped from US$ 140-US$ 145 per MT in the beginning of August 2008 to US$ 52 in March 2009. However, now the scenario is changing. China’s crude steel production increased 12.6% y-o-y in July 2009 to 50.7 mmt. This increase in steel demand is expected to result in higher demand for iron ore, thus keeping the iron ore prices firm.
?
?
Social Factors
?
The problem of mining-induced displacement and resettlement (MIDR) poses major risks to societal sustainability. The closure and suspension of work in more than 50 iron ore mines in Orissa over the past few months has hit supplies for export. The unrest among local residents due to landlessness, joblessness, homelessness and changes in population dynamics.
?
?
Technological Factors
?
In India, there are no exploration programmes undertaken for locating new additional deposits of iron ore. Many technological improvements have helped the mining industry
in cost controls, emission controls, and mineral conservation and in bringing down the alumina content of the ore.
Competitor Analysis:
Technically, Coal India is not a monopoly. Many private sector players today have captive coal fields for their own use. But Coal India and its myriad subsidiaries virtually control the bulk of this business, if not for anything else, for the simple reason that nobody else is equipped to cater to the huge Indian demand. For many years, if not decades, Coal India is not expected to have any serious competition.
SWOT Analysis Strengths:
1. The government offers a wide range of concessions to investors in India, engaged in mining activity. The main concessions include, inter alia * Mining in specified backward districts is eligible for a complete tax holiday for a period of 5 years from commencement of production and a 30 percent tax holiday for 5 years thereafter. * Environment protection equipment, pollution control equipment, energy saving equipment and certain other equipment eligible for 100 percent depreciation. * One tenth of the expenditure on prospecting or extracting or production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income. * Export profits from specified minerals and ores are eligible for certain concessions under the Income tax Act. * Minerals in their finished form exempt from excise duty. * Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron, unwrought aluminium. * Capital goods imported for mining under EPCG scheme qualify for concessional customs duty subject to certain export obligation. World's largest producer of mica; third largest producer of coal and lignite & barytes; ranks among the top producers of iron ore, bauxite, manganese ore and aluminium.
2.
3. 4. 5. 6.
Labours easily available Low labour and conversion costs Large quantity of high quality reserves Exports iron-ore to China and Japan on a large scale Strategic location : Proximity to the developed European markets and fastdeveloping Asian markets for export of Steel, Aluminium
7.
Weakness:
1.
Coal mining in India is associated with poor employee productivity. The output per miner per annum in India varies from 150 to 2,650 tonnes compared to an average of around 12,000 tonnes in the U.S. and Australia; and Historically, opencast mining has been favored over underground mining. This has led to land degradation, environmental pollution and reduced quality of coal as it tends to get mixed with other matter; India has still not been able to develop a comprehensive solution to deal with the fly ash generated at coal power stations through use of Indian coal. Clean coal technologies, such as Integrated Gasification Combined Cycle, where the coal is converted to gas, are available, but these are expensive and need modification to suit Indian coal specifications. Poor infrastructure facilities Mining technology is outdated Low innovation capabilities Labor force is highly un-skilled and inexperienced High rate of accidents Lack of R&D programs and training and development Most of the Indian mining companies do not have access to Indian capital market There is a lack of respect for the mining industry and it suffers from the incorrect perception that ore deposits are depleted. There is limited access to capital, and mines are increasingly more costly to find, acquire, develop and produce. There are long lead times on production decisions.
2.
3.
4. 5. 6. 7. 8. 9. 10. 11.
12.
13.
14.
The Indian mining industry suffers from an out-dated, unattractive approach to mining education that is partly to blame for insufficient human resources. in operational efficiency of the mining companies - Mining companies are in need of an organizational transformation to gradually align its operating costs to international standards. Mining costs of Indian companies are at least 35 percent higher than those of leading coal exporting countries such as Australia, Indonesia, and South Africa. To match productivity, they will need to invest in new technologies, improve processes in planning and execution of projects, and institutionalize a comprehensive risk management framework. Mining operations are not environment friendly. Least importance is given to environment concerns. High rate of illegal mining
15. Improvement
16.
17.
Opportunities:
1.
India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited. Besides coal, oil and gas reserves, the mineral inventory in India includes 13,000 deposits/ prospects of 61 non-fuel minerals. Expenditure outlay on mining is a meager sum when compared to other competing emerging mining markets and the investment gap is most likely to be covered by the private sector. India welcomes joint ventures between foreign and domestic partners to mobilise finances and technology and secure access to global markets. Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, nickel, cobalt, molybdenum, lithium, tin, tungsten, silver, platinum group of metals and other rare metals, chromite and manganese ore, and fertiliser minerals. The main opportunities in the mining sector (excluding coal and industrial minerals) are in the development and production of surplus commodities such as iron ore and bauxite, mica, potash, few low-grade ores, mining of small gold deposits, development of placer gold resources located on the frontal belt of the Himalayas, mining known deposits of economic and marginal categories such as base metals in Bihar and Rajasthan and exploitation of laterite for nickels in Orissa, molybdenum in Tamil Nadu and tin in Haryana. Considerable potential exists for setting up manufacturing units for value added products. There exists considerable opportunities for future discoveries of sub-surface deposits with the application of modern techniques. Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the reserves of the country are beyond this depth Strengthening of logistics in coal distribution - In India, the logistics infrastructure such as ports and railways are overburdened and costly and act as bottlenecks in
2.
3.
4. 5.
6.
7.
development of free market. Privatization of ports may bring the needed efficiencies and capacities. In addition, capacity addition by the Indian Railways is necessary to increase freight capacity from the coal producing regions to demand centers in the northern and central parts of the country. On the Indian rail network, freight trains get a lower priority than passenger trains, a problem that promotes delays and inefficiency. Special freight corridors would raise speeds, cut costs, and increase the system's reliability.
8.
Focusing on technology for future - India's numerous technology research institutes are working on energy related R&D. However, there is a possibility that they are operating in a fragmented fashion. The Government may get improved recoveries on its investment by concentrating on few important technology areas. To start with focus may be applied for tighter emission standards and development of inexpensive clean-coal technologies viz. extraction of methane from coal deposits. Estimated 82 billion tonnes of reserves of various metals yet to be tapped While India has 7.5% of the world's total bauxite deposits, aluminium production capacity is only 3% of world capacity, indicating the scope and need for new capacities
9. 10.
Threats:
1. 2.
Foreign Investment in the Mining Sector During 1999, the Government had cleared 7 more proposals of leading international mining companies for prospecting and exploration in the mineral sector to the tune of US$ 62.5 million. 65 licenses have been issued till date for prospecting an area of around 90,142 sqkms in the states of Rajasthan, Maharashtra, Gujarat, Bihar, Haryana and Madhya Pradesh. Prospecting licenses have been granted in favour of Indian subsidiaries of well-known mining companies. These include BHP Minerals, CRA Exploration supported by Rio Tinto (RTZ-CRA), Phelps Dodge of USA, Metmin Finance and Holding supported by Metdist Group of Companies UK, Meridien Minerals of Canada, RBW Mineral Industries supported by White Tiger Resources of Australia, etc. Large integrated international metal manufacturers including POSCO, Mittal Steel and Alcan have announced plans for expansion in India Mining companies and equipment suppliers are under the constant threat of being taken over by foreign companies. A heavy tax burden discourages further investment. Politicians undervalue the industry's contributions to the economy. Stricter environment rules restricting mining activities
3.
4.
5. 6. 7.
Company Analysis:
Company description
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.
CIL was formerly owned entirely by the Union Government of India, under the administrative control of the Ministry of Coal. It is involved in coal mining and production industry. CIL ranked as one of India's most valuable company by market value.
In 2010, CIL's initial public offering (IPO) got subscribed 15.28 times, collecting a record over 2.4 trillion—the highest IPO subscription so far. On the first day of its listing on the Sensex, its stock closed 40% higher than IPO price. It is India's largest ever public offer from Coal India Ltd. to raise up to 15,000 crore (US$2.99 billion). It is currently 90% owned by the Government of India with the remaining 10% owned by the public.
Products Offered:
1. COKING COAL : • • • • These coals, when heated in the absence of air, form coherent beads, free from volatiles, with strong and porous mass, called coke. These have coking properties Mainly used in steel making and metallurgical industries Also used for hard coke manufacturing
2. SEMI COKING COAL : • These coals, when heated in the absence of air, form coherent beads not strong enough to be directly fed into the blast furnace. Such coals are blended with coking coal in adequate proportion to make coke. These have comparatively less coking properties than coking coal Mainly used as blend-able coal in steel making, merchant coke manufacturing and other metallurgical industries
• •
3. NLW COKING COAL : • This coal is not used in metallurgical industries. Because of higher ash content, this coal is not acceptable for washing in washeries. This coal is used for power utilities and non-core sector consumers.
4. NON-COKING COAL : • • • These are coals without coking properties. Mainly used as thermal grade coal for power generation Also used for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing, and for other heating purposes
5. WASHED AND BENEFICIATED COAL:
•
These coals have undergone the process of coal washing or coal beneficiation, resulting in value addition of coal due to reduction in ash percentage. Used in manufacturing of hard coke for steel making Beneficiated and washed non-coking coal is used mainly for power generation Beneficiated non-coking coal is used by cement, sponge iron and other industrial plants
• • •
6. MIDDLINGS : • • • Middlings are by-products of the three stage coal washing / beneficiation process, as a fraction of feed raw coal. Used for power generation Also used by domestic fuel plants, brick manufacturing units, cement plants, industrial plants, etc.
7. REJECTS : • • Rejects are the products of coal beneficiation process after separation of cleans and / or middlings, as a fraction of feed raw coal. Used for Fluidized Bed Combustion (FBC) Boilers for power generation, road repairs, briquette (domestic fuel) making, land filling, etc.
8. CIL COKE / LTC COKE : • CIL Coke / LTC Coke is a smokeless, environment friendly product of the Dankuni Coal Complex, obtained through low temperature carbonisation. Used in furnaces and kilns of industrial units Also used as domestic fuel by halwais, hotels, etc.
• •
9. COAL FINES / COKE FINES : • These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively, obtained from the Dankuni Coal Complex and other coke oven plants. Used in industrial furnaces as well as for domestic purposes
•
10. TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH : • • These are products from Dankuni Coal Complex using low temperature carbonisation of non-coking coal in vertical retorts. Used in furnaces and boilers of industrial plants as well as power houses, oil, dye, pharmaceutical industries, etc.
General information about CIL
•
•
Largest coal producing company in the world Headquarters: Kokatta, West Bengal Bombay Stock Exchange ticker: 533278 National Stock Exchange of India ticker: COALINDIA No. of employees: 383347 Produces around 81.1% of India's overall coal production 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 Commands nearly 74% of the Indian coal market Feeds 82 out of 86 coal based thermal power plants in India Accounts for 76% of total thermal power generating capacity of the Utility sector Supplies coal at prices discounted to international prices Insulates Indian coal consumers against price volatility
• • • • •
• • • • •
•
Makes the end user industry globally competitive
Coal India Limited was formed in 1973 as Coal Mines Authority Limited. In 1975 it was changed to Coal India Limited as a holding company with five subsidiaries:
? ? ? ? ?
Bharat Coking Coal Limited (BCCL)(Dhanbad, Jharkhand) Central Coalfields Limited (CCL)(Ranchi, Jharkhand) Western Coalfields Limited (WCL)(Nagpur region) Eastern Coalfields Limited (ECL)(Sanctoria, Asansol, West Bengal)
Central Mine Planning and Design Institute Limited (CMPDIL)(Ranchi, Jharkhand) In 1985 two more subsidiaries were added:
? ?
South Eastern Coalfields Limited (SECL)(Bilaspur) Northern Coalfields Limited, Singrauli (NCL,Singrauli)
In 1992 one more subsidiary added:
?
Mahanadi Coalfields Limited (MCL) (Sambalpur)
One International Subsidiary
?
Coal India Africana Limitada (CIAL) (Mozambique)
Two indirect subsidiaries (held through our subsidiary, Mahanadi Coalfields Limited)
? ?
MJSJ Coal Limited MNH Shakti Limited
The Indian Institute of Coal Management (IICM) at Ranchi operates under Coal India Limited and imparts multi disciplinary management development programs executives.
Corporate Structure
Financial performance
• • • Revenues- INR502,335.9 million ($11,016.2 million) during the financial year ended March 2011 (FY2011), an increase of 12.6% over FY2010. Operating profit- INR197,988.6 million ($4,341.9 million) during FY2011, an increase of 14% over FY2010. Net profit- INR108,673.5 million ($2,383.2 million) in FY2011, an increase of 12.9% over FY2010.
Material Agreements/Joint Ventures/MOUs
?
Agreement between our Company and Indian Oil Corporation Limited, IBP Division ("IOCL-IBP") for the supply of bulk loading explosives to our Subsidiaries. Agreement between our Company and Mitsui & Co. Limited ("Mitsui") for the supply of OTR Tires to NCL. Memorandum of Understanding between CMPDIL and our Company for 2010-2011. Memorandum of Understanding between our Company and Rail India Technical & Economic Services Limited ("RITES") for provision of management consultancy services.
?
? ?
?
Joint Venture Agreement dated September 27, 2007 with BEML Limited and Damodar Valley Corporation. Joint Venture Agreement dated October 12, 2009 with NTPC. Joint Venture Agreement dated January 14, 2009 with Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, NMDC Limited and NTPC Limited. Memorandum of Understanding dated January 10, 2008 with GAIL (India) Limited ("GAIL") Memorandum of Intent dated December 14, 2009 with GAIL and Rashtriya Chemicals and Fertilizers Limited ("RCF").
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?
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doc_846551695.doc
It explains about Industry Trends in Indian mining industry, PEST Analysis of mining Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Coal India, it's Finance performance, SWOT analysis of Coal India and Various marketing Strategies employed
Company Analysis: Coal India Ltd. Industry Analysis:
Indian Mining Industry India is endowed with significant mineral resources. India produces 89 minerals out of which 4 are fuel minerals, 11 metallic, 52 non-metallic and 22 minor minerals. In India, 80% of mining is in coal and the balance 20% is in various metals and other raw materials such as gold, copper, iron, lead, bauxite, zinc and uranium. India with diverse and significant mineral resources is the leading producer of some of the minerals. The total value of mineral production was Rs. 568070 million in 2000-2001, of which the value of minerals other than petroleum and natural gas was Rs. 306751 million. The metallic production is accounted for by iron-ore, copper-ore, chromite and/or zinc concentrates, gold, manganese ore, bauxite, lead concentrates. Amongst the non-metallic minerals, more than 90 percent of the aggregate value is shared by limestone, magnesite, dolomite, barytes, kaolin, gypsum, apatite & phosphorite, steatite and fluorite. India is the world's largest producer of mica blocks and mica splittings. With the recent spurt in world demand for chromite, India has stepped up its production to reach the third rank among the chromite producers of the world. Besides, India ranks 3rd in production of coal & lignite and barytes, 4th in iron ore, 6th in bauxite and manganese ore, 10 in aluminium and 11 th in crude steel in the World. Over 1.1 million people are employed in the Indian mining industry. With over 2,326 private and 292 public operating mines in the country, minerals form 16 percent of India's exports. Coal Mining The majority of the energy requirement in India is met by coal, largely mined in the eastern and the central regions of the country. In 2004-05, the total coal production in the country was around 350 million MT and majority of it catered to the core sectors of power, steel and cement. Inspite of various policy initiatives to diversify the fuel mix, it is becoming increasingly evident that coal will continue to play the major role in sustaining the growth momentum of India. Based on estimates, the consumption of coal is projected to rise by nearly 40 percent over the next five years and almost to double by 2020. However, in the recent past, the coal sector in the country has come under pressure over its inability to meet demand (both planned and unplanned) of the user industries. By Government's own estimates, coal production will lag behind demand by about 100 million MT as of 2012 and by 250 million MT by 2020.
Major players in coal mining Name of Company Production 2004 (MMT) 306 34 21 361
CIL (Public Sector) SCCL (Public Sector) Others Total
Note: Excludes NLC production of lignite
Type-wise and Category-wise coal resources of India as on January 1, 2005 (in Million Tonnes): Type Coal of Proved Indicated Inferred Total
(A) Coking
rime Coking -Medium Coking 4614 11417 699 11765 1889 5313 25071-SemiCoking Sub-Total Coking (B) NonCoking*:Total (Coking & NonCoking)
482 16513 76447 92960
1003 13467 103623 117090
222 2111 35686 37797
1707 32091 215756 247847
PEST Analysis: Political Factors
?
Difficulty in obtaining clearances and leases from the state governments. There are various clearances which need to be obtained from different ministries stated below which is a cumbersome and time consuming process:
? ? ? ? ? ? ? ?
Department of Mines Indian Bureau of Mines Goa State Pollution Control Board Geological Survey of India Ministry of enviromental and forests Central Board of Excise and Customs Department of Heavy Industry Ministry of labour
?
The contribution of iron ore to inflation Domestic inflation has also been rising since December 2007. The iron and steel products constitutes 3.64 per cent of the wholesale price index (WPI). Hence, controlling the sharp rise in domestic steel prices, and thereby containing inflation, had become a priority for the government. The government had since been taking measures to soften the iron ore prices.
?
Government’s approach of giving priority to the domestic players To curb the increasing pressure on the domestic steel industries due to increasing global prices after recession, the Government used duties and royalty as tools to keep the supplies in the domestic market. An ad valorem duty of 15% was imposed on all grades of ore export in June 2008, as against a specific duty applicable earlier.
Economic Factors
?
The fluctuations in the exchange rates impact the performance of the mining Industry Indian iron ore industry thrives on exports. Goa exports 96% of its iron ore production and 84% of revenues is accounted for by exports to China.
?
As per mining legislation of India there is no restriction on foreign equity holdings in mining sector companies registered in India. China being the highest buyer of iron ore, it is the key driver of the global iron ore industry. Its economic scenario impacts the entire industry. Change in the scale of steel production The free on board (FOB) price of reference grade Indian iron ore dropped from US$ 140-US$ 145 per MT in the beginning of August 2008 to US$ 52 in March 2009. However, now the scenario is changing. China’s crude steel production increased 12.6% y-o-y in July 2009 to 50.7 mmt. This increase in steel demand is expected to result in higher demand for iron ore, thus keeping the iron ore prices firm.
?
?
Social Factors
?
The problem of mining-induced displacement and resettlement (MIDR) poses major risks to societal sustainability. The closure and suspension of work in more than 50 iron ore mines in Orissa over the past few months has hit supplies for export. The unrest among local residents due to landlessness, joblessness, homelessness and changes in population dynamics.
?
?
Technological Factors
?
In India, there are no exploration programmes undertaken for locating new additional deposits of iron ore. Many technological improvements have helped the mining industry
in cost controls, emission controls, and mineral conservation and in bringing down the alumina content of the ore.
Competitor Analysis:
Technically, Coal India is not a monopoly. Many private sector players today have captive coal fields for their own use. But Coal India and its myriad subsidiaries virtually control the bulk of this business, if not for anything else, for the simple reason that nobody else is equipped to cater to the huge Indian demand. For many years, if not decades, Coal India is not expected to have any serious competition.
SWOT Analysis Strengths:
1. The government offers a wide range of concessions to investors in India, engaged in mining activity. The main concessions include, inter alia * Mining in specified backward districts is eligible for a complete tax holiday for a period of 5 years from commencement of production and a 30 percent tax holiday for 5 years thereafter. * Environment protection equipment, pollution control equipment, energy saving equipment and certain other equipment eligible for 100 percent depreciation. * One tenth of the expenditure on prospecting or extracting or production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income. * Export profits from specified minerals and ores are eligible for certain concessions under the Income tax Act. * Minerals in their finished form exempt from excise duty. * Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron, unwrought aluminium. * Capital goods imported for mining under EPCG scheme qualify for concessional customs duty subject to certain export obligation. World's largest producer of mica; third largest producer of coal and lignite & barytes; ranks among the top producers of iron ore, bauxite, manganese ore and aluminium.
2.
3. 4. 5. 6.
Labours easily available Low labour and conversion costs Large quantity of high quality reserves Exports iron-ore to China and Japan on a large scale Strategic location : Proximity to the developed European markets and fastdeveloping Asian markets for export of Steel, Aluminium
7.
Weakness:
1.
Coal mining in India is associated with poor employee productivity. The output per miner per annum in India varies from 150 to 2,650 tonnes compared to an average of around 12,000 tonnes in the U.S. and Australia; and Historically, opencast mining has been favored over underground mining. This has led to land degradation, environmental pollution and reduced quality of coal as it tends to get mixed with other matter; India has still not been able to develop a comprehensive solution to deal with the fly ash generated at coal power stations through use of Indian coal. Clean coal technologies, such as Integrated Gasification Combined Cycle, where the coal is converted to gas, are available, but these are expensive and need modification to suit Indian coal specifications. Poor infrastructure facilities Mining technology is outdated Low innovation capabilities Labor force is highly un-skilled and inexperienced High rate of accidents Lack of R&D programs and training and development Most of the Indian mining companies do not have access to Indian capital market There is a lack of respect for the mining industry and it suffers from the incorrect perception that ore deposits are depleted. There is limited access to capital, and mines are increasingly more costly to find, acquire, develop and produce. There are long lead times on production decisions.
2.
3.
4. 5. 6. 7. 8. 9. 10. 11.
12.
13.
14.
The Indian mining industry suffers from an out-dated, unattractive approach to mining education that is partly to blame for insufficient human resources. in operational efficiency of the mining companies - Mining companies are in need of an organizational transformation to gradually align its operating costs to international standards. Mining costs of Indian companies are at least 35 percent higher than those of leading coal exporting countries such as Australia, Indonesia, and South Africa. To match productivity, they will need to invest in new technologies, improve processes in planning and execution of projects, and institutionalize a comprehensive risk management framework. Mining operations are not environment friendly. Least importance is given to environment concerns. High rate of illegal mining
15. Improvement
16.
17.
Opportunities:
1.
India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited. Besides coal, oil and gas reserves, the mineral inventory in India includes 13,000 deposits/ prospects of 61 non-fuel minerals. Expenditure outlay on mining is a meager sum when compared to other competing emerging mining markets and the investment gap is most likely to be covered by the private sector. India welcomes joint ventures between foreign and domestic partners to mobilise finances and technology and secure access to global markets. Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, nickel, cobalt, molybdenum, lithium, tin, tungsten, silver, platinum group of metals and other rare metals, chromite and manganese ore, and fertiliser minerals. The main opportunities in the mining sector (excluding coal and industrial minerals) are in the development and production of surplus commodities such as iron ore and bauxite, mica, potash, few low-grade ores, mining of small gold deposits, development of placer gold resources located on the frontal belt of the Himalayas, mining known deposits of economic and marginal categories such as base metals in Bihar and Rajasthan and exploitation of laterite for nickels in Orissa, molybdenum in Tamil Nadu and tin in Haryana. Considerable potential exists for setting up manufacturing units for value added products. There exists considerable opportunities for future discoveries of sub-surface deposits with the application of modern techniques. Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the reserves of the country are beyond this depth Strengthening of logistics in coal distribution - In India, the logistics infrastructure such as ports and railways are overburdened and costly and act as bottlenecks in
2.
3.
4. 5.
6.
7.
development of free market. Privatization of ports may bring the needed efficiencies and capacities. In addition, capacity addition by the Indian Railways is necessary to increase freight capacity from the coal producing regions to demand centers in the northern and central parts of the country. On the Indian rail network, freight trains get a lower priority than passenger trains, a problem that promotes delays and inefficiency. Special freight corridors would raise speeds, cut costs, and increase the system's reliability.
8.
Focusing on technology for future - India's numerous technology research institutes are working on energy related R&D. However, there is a possibility that they are operating in a fragmented fashion. The Government may get improved recoveries on its investment by concentrating on few important technology areas. To start with focus may be applied for tighter emission standards and development of inexpensive clean-coal technologies viz. extraction of methane from coal deposits. Estimated 82 billion tonnes of reserves of various metals yet to be tapped While India has 7.5% of the world's total bauxite deposits, aluminium production capacity is only 3% of world capacity, indicating the scope and need for new capacities
9. 10.
Threats:
1. 2.
Foreign Investment in the Mining Sector During 1999, the Government had cleared 7 more proposals of leading international mining companies for prospecting and exploration in the mineral sector to the tune of US$ 62.5 million. 65 licenses have been issued till date for prospecting an area of around 90,142 sqkms in the states of Rajasthan, Maharashtra, Gujarat, Bihar, Haryana and Madhya Pradesh. Prospecting licenses have been granted in favour of Indian subsidiaries of well-known mining companies. These include BHP Minerals, CRA Exploration supported by Rio Tinto (RTZ-CRA), Phelps Dodge of USA, Metmin Finance and Holding supported by Metdist Group of Companies UK, Meridien Minerals of Canada, RBW Mineral Industries supported by White Tiger Resources of Australia, etc. Large integrated international metal manufacturers including POSCO, Mittal Steel and Alcan have announced plans for expansion in India Mining companies and equipment suppliers are under the constant threat of being taken over by foreign companies. A heavy tax burden discourages further investment. Politicians undervalue the industry's contributions to the economy. Stricter environment rules restricting mining activities
3.
4.
5. 6. 7.
Company Analysis:
Company description
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.
CIL was formerly owned entirely by the Union Government of India, under the administrative control of the Ministry of Coal. It is involved in coal mining and production industry. CIL ranked as one of India's most valuable company by market value.
In 2010, CIL's initial public offering (IPO) got subscribed 15.28 times, collecting a record over 2.4 trillion—the highest IPO subscription so far. On the first day of its listing on the Sensex, its stock closed 40% higher than IPO price. It is India's largest ever public offer from Coal India Ltd. to raise up to 15,000 crore (US$2.99 billion). It is currently 90% owned by the Government of India with the remaining 10% owned by the public.
Products Offered:
1. COKING COAL : • • • • These coals, when heated in the absence of air, form coherent beads, free from volatiles, with strong and porous mass, called coke. These have coking properties Mainly used in steel making and metallurgical industries Also used for hard coke manufacturing
2. SEMI COKING COAL : • These coals, when heated in the absence of air, form coherent beads not strong enough to be directly fed into the blast furnace. Such coals are blended with coking coal in adequate proportion to make coke. These have comparatively less coking properties than coking coal Mainly used as blend-able coal in steel making, merchant coke manufacturing and other metallurgical industries
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3. NLW COKING COAL : • This coal is not used in metallurgical industries. Because of higher ash content, this coal is not acceptable for washing in washeries. This coal is used for power utilities and non-core sector consumers.
4. NON-COKING COAL : • • • These are coals without coking properties. Mainly used as thermal grade coal for power generation Also used for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing, and for other heating purposes
5. WASHED AND BENEFICIATED COAL:
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These coals have undergone the process of coal washing or coal beneficiation, resulting in value addition of coal due to reduction in ash percentage. Used in manufacturing of hard coke for steel making Beneficiated and washed non-coking coal is used mainly for power generation Beneficiated non-coking coal is used by cement, sponge iron and other industrial plants
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6. MIDDLINGS : • • • Middlings are by-products of the three stage coal washing / beneficiation process, as a fraction of feed raw coal. Used for power generation Also used by domestic fuel plants, brick manufacturing units, cement plants, industrial plants, etc.
7. REJECTS : • • Rejects are the products of coal beneficiation process after separation of cleans and / or middlings, as a fraction of feed raw coal. Used for Fluidized Bed Combustion (FBC) Boilers for power generation, road repairs, briquette (domestic fuel) making, land filling, etc.
8. CIL COKE / LTC COKE : • CIL Coke / LTC Coke is a smokeless, environment friendly product of the Dankuni Coal Complex, obtained through low temperature carbonisation. Used in furnaces and kilns of industrial units Also used as domestic fuel by halwais, hotels, etc.
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9. COAL FINES / COKE FINES : • These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively, obtained from the Dankuni Coal Complex and other coke oven plants. Used in industrial furnaces as well as for domestic purposes
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10. TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH : • • These are products from Dankuni Coal Complex using low temperature carbonisation of non-coking coal in vertical retorts. Used in furnaces and boilers of industrial plants as well as power houses, oil, dye, pharmaceutical industries, etc.
General information about CIL
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Largest coal producing company in the world Headquarters: Kokatta, West Bengal Bombay Stock Exchange ticker: 533278 National Stock Exchange of India ticker: COALINDIA No. of employees: 383347 Produces around 81.1% of India's overall coal production 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 Commands nearly 74% of the Indian coal market Feeds 82 out of 86 coal based thermal power plants in India Accounts for 76% of total thermal power generating capacity of the Utility sector Supplies coal at prices discounted to international prices Insulates Indian coal consumers against price volatility
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Makes the end user industry globally competitive
Coal India Limited was formed in 1973 as Coal Mines Authority Limited. In 1975 it was changed to Coal India Limited as a holding company with five subsidiaries:
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Bharat Coking Coal Limited (BCCL)(Dhanbad, Jharkhand) Central Coalfields Limited (CCL)(Ranchi, Jharkhand) Western Coalfields Limited (WCL)(Nagpur region) Eastern Coalfields Limited (ECL)(Sanctoria, Asansol, West Bengal)
Central Mine Planning and Design Institute Limited (CMPDIL)(Ranchi, Jharkhand) In 1985 two more subsidiaries were added:
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South Eastern Coalfields Limited (SECL)(Bilaspur) Northern Coalfields Limited, Singrauli (NCL,Singrauli)
In 1992 one more subsidiary added:
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Mahanadi Coalfields Limited (MCL) (Sambalpur)
One International Subsidiary
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Coal India Africana Limitada (CIAL) (Mozambique)
Two indirect subsidiaries (held through our subsidiary, Mahanadi Coalfields Limited)
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MJSJ Coal Limited MNH Shakti Limited
The Indian Institute of Coal Management (IICM) at Ranchi operates under Coal India Limited and imparts multi disciplinary management development programs executives.
Corporate Structure
Financial performance
• • • Revenues- INR502,335.9 million ($11,016.2 million) during the financial year ended March 2011 (FY2011), an increase of 12.6% over FY2010. Operating profit- INR197,988.6 million ($4,341.9 million) during FY2011, an increase of 14% over FY2010. Net profit- INR108,673.5 million ($2,383.2 million) in FY2011, an increase of 12.9% over FY2010.
Material Agreements/Joint Ventures/MOUs
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Agreement between our Company and Indian Oil Corporation Limited, IBP Division ("IOCL-IBP") for the supply of bulk loading explosives to our Subsidiaries. Agreement between our Company and Mitsui & Co. Limited ("Mitsui") for the supply of OTR Tires to NCL. Memorandum of Understanding between CMPDIL and our Company for 2010-2011. Memorandum of Understanding between our Company and Rail India Technical & Economic Services Limited ("RITES") for provision of management consultancy services.
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Joint Venture Agreement dated September 27, 2007 with BEML Limited and Damodar Valley Corporation. Joint Venture Agreement dated October 12, 2009 with NTPC. Joint Venture Agreement dated January 14, 2009 with Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, NMDC Limited and NTPC Limited. Memorandum of Understanding dated January 10, 2008 with GAIL (India) Limited ("GAIL") Memorandum of Intent dated December 14, 2009 with GAIL and Rashtriya Chemicals and Fertilizers Limited ("RCF").
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