PROJECT ON SALES AND MARKETING OF COAL

(CENTRAL COALFIELD LTD. RANCHI)

Organized by:-

Submitted in partial fulfillment of theRequirements for the award of Degree of

Bachelor of Business Administration

Submitted by:-Anuj Kumar Giri

Course- BBA (Hons.)Session-2008-11

Lovely professional University, Punjab

Central Coalfield Limited, Ranchi (Jharkhand)

CERTIFICATE

This is to certify that the dissertation entitled “TRAINING ON SALES

AND MARKETING OF COAL” with special reference to Central

Coalfield Ltd. Headquarter “Darbhanga House” has been prepared by

ANUJ KUMAR GIRI, in practical fulfillment of requirement program

course BBA (Hons.) from LOVELY PROFESSIONAL

UNIVERSITY, PUNJAB. I appreciate his skill, diligence and sense of

commitment in preparation of the project. (17/06/2010 to 30/07/2010)

Mr. R.B. Lal Mr. J. GabrialProject Guide G.M (HRD)Sales officer CCL, Headquarter CCL Headquarter Darbhanga House, Ranchi Darbhanga House, Ranchi

2 | P a g e

ACKNOWLEDGEMENT

Any accomplishment requires the effort of many people and this work is

no different. It precedes the help and guidance of many people directly

and indirectly. This project is also the outcomes of the assistance,

guidance and suggestions of various officials inside CCL.

I would like to sincerely express my thanks to Mr. V.B. Sahay,

General manager ( S&M ) to give permission for the training and Mr. R.B.

Lal Sr. Sales Officer, Miss. Nishi Suman Minz (Sales Officer) for guiding

me more familiar with my topic and for his continuous guidance,

encouragement and inspiring suggestions.

I would also like to thank Mr. J. Gabrial, General Manager

(HRD) for his valuable suggestions and guidance for preparing the project

report.

3 | P a g e

CONTENTS

Sl. No. Particulars Page Nos.

1. INTRODUCTION 5 - 7

2. RESEARCH METHADOLOGY 8 - 9

3. COMPANY PROFILE 10 - 19

4. PRODUCTION 20 - 22

5. MARKETING SET UP 23 - 26

6. COMPETITORS 27 - 28

7. MARKETING MIX 28 - 42

8. DISTRIBUTION (METHOD & PROBLEMS) 43 - 45

9. NEW SCHEME FOR DISTRIBUTION 46 - 50

10. ANALYSIS & CONCLUSION 51 - 54

11. BIBLIOGRAPHY 55

4 | P a g e

INTRODUCTION

Coal India Ltd:

Coal India Limited (CIL) is a public sector undertaking of the Indian

Government. It is the world's largest coal miner. It is owned entirely by

the Union Government, under the administrative control of the Ministry

of Coal. It is involved in coal mining and production industry . Indian

Coal at the pithead is the cheapest Coal in the world with low sulphur

content. Indian Coal is eco-friendly; CIL’s business plan therefore aims

primarily to translate these strong economic fundamental of Coal into

prosperity for the country and the company.

With eight wholly owned subsidiary companies, operating in many

states, CIL’s activities comprehensively over A to Z in Coal extraction.

Identification of coal reserves, detailed exploration followed by

projectisation, design and implementation of projects and optimizing

operation in 465 existing underground and open cast mines, 17

beneficiation plan plants and one coal carbonization plant are some in

CIL’s range of activities.

CIL welcome private participation in coal beneficiation.

Participation of international coal mining companies in development of

underground coal mines with modern technology is also receiving CIL’s

consideration.

The government of India, the sole owner of CIL, has sanctioned

major policy support package which, besides restricting government’s

holding in the company, has progressively freed coal prices from

administrative control. Coal mining is also being opened up to private

investment.

5 | P a g e

OBJECTIVE FOR STUDY

To know and understand the present sales and marketing system of

Central Coalfield Limited (CCL), Ranchi.

To know the present scenario of Central Coalfield Limited.

To know the marketing and distribution strategies (method &

problem) in Central Coalfield Limited (CCL)

To know the initiative taken by the company for his/her employee

working in the organization.

To know the dispatches of coal to consumers.

To study the competitors of the company.

6 | P a g e

IMPORTANT EVENTS

o 1743 Commercial production of coal by east India company for the

manufacture of arms and ammunition.

o 1815 Opening of the first shaft mine near Raniganj town.

o 1843 MIS Carr. Tagore and other company amalgamated into the

Bengal Company Ltd. This was the first joint stock company in India.

o 1853 Commencement of Railways service in India.

o 1855 Opening up of railways from Culcutta to Raniganj, the the

turning point of Coal industry in India.

o 1862 Coal mine began in central province Jharia Coalfield by the

Government of India undertaking 1st phase of Coal nationalization.

o 1965 Formation of National Coal Development Corporation Ltd.

o 1971 Coking Coal Nationalization.

o 1973 Non-Coking Coal Nationalization.

o 1975 Establishment of Coal India Ltd. (CIL)

o 1985 Northern Coalfield Limited (NCL) and south eastern Coalfield

Limited (SECL) carved out of CCL and WCL.

o 1992 Mahanadi Coalfield Limited (MCL) formed out of SECL to

manage the talcher and IB Valley Coalfield in Orissa.

o 2000 De- regulation of Coal pricing and distribution of coal.

o 2007 Coal India & five of its subsidiaries viz, NCL, CCL, SECL,

MCL, WCL conferred “Mini Ratna” status.

7 | P a g e

RESEARCH

METHODOLOGY

8 | P a g e

SOURCE OF INFORMATION

The information is based on:

Primary Data: primary data were gathered through personal interviews

of CCL official.

Secondary Data: secondary data were collected from the various

published report, circulars, journals and books relating to Coal and

publication of different institution including foreign magazines on the

topic.

Constraints in Data collection:

Different Coal consumers belonging to public enterprises and

private industries could not be interviewed due to shortage of time. Most

of the executives of CCL, Consumers and railways officers are reluctant

to give relevant information due to their internal policy of maintaining

secrecy.

9 | P a g e

COMPANY PROFILE

VISION

Being the domestic leader, CCL strive to be leading international

player in energy sector through best practices from mine to market.

MISSION

The mission of Coal India is to produce and market the planned

quantity of coal efficiently and economically with due respect to safety,

conservation and quantity.

PROFILE

Coal India Ltd. Is the 3rd largest Coal producing company in the

world having about 5 lacks employee with headquarter in Calcutta is a

holding company under ministry of Coal, Govt. of India, for the entire

Coal industry in the country barring the Coal mine in A.P (which comes

under the jurisdiction of Singreni Collieries Company Ltd. and Govt. of

A.P) and the captive mine of TISCO, IISCO and DVC. It was formed as

a public sector undertaking in Nov. 1975, for recognizing the

nationalized Coal mines and ensuring integrated development, the prime

source of energy.

Coal India presently contributes 90% of total Coal production

companies- ECL, BCCL, NCL, WCL, MCL, SECL and the CMPDIL for

mine planning, designing and engg. Consultancy services. The mine of

North Eastern Coalfield (Assam and Meghalaya) and Dankuni Coal

10 | P a g e

Company (DCC) in West Bengal operates directly under Coal India. Coal

India currently 465 and 19 washier spread over and 8 states to produce

and beneficiate Coal for meeting the demand of consumer all over the

country. The ranges of products are: Raw coal (coking and non-coking),

Washed coal, Middling, soft coke & Hard coke, coal, tar, coal gas, coal

chemicals etc.

11 | P a g e

BUSINESS OBJECTIVES

To carry on business of Coal mining.

Acquisition of Coal mining.

Production, sale and disposal of Coal and its bi-products.

Coal benefaction, manufacturing Coke, bi-product of Coal and

other business.

Reorganization and reconstruction of Coal mines taken over by

Govt.

Policy formulation and advisory functions.

To act as an entrepreneur on behalf of state in respect of Coal

Industry.

To finance replacement expenditure.

To develop technical know-how.

Exploration and prospecting.

To manufacture and sell Coal as a patent fuel.

To act as a colliery and mine proprietors, coke manufactures in all

their respective branches.

12 | P a g e

ROLE OF CCL

1. To get implemented the policy and program laid down by the

government of India. CIL ensures working in accordance with the

guidelines and directions issued by them from time to time.

2. To keep them informed of the program with regard to implementation

of their policies and progress in accordance with the guideline and

direction issued by them.

3. To plan and carryout all operations in such a manner that there is no

risk of loss, injury or damage to the health of workman.

4. To adopt techniques and methods working such that loss of coal

Reserves by ways similar to other reasons and blockage of reserved in

barriers etc. in the east.

5. To draw annual plans for production, preparation and dispatch of coal

Connect activities keeping in priority wise demand.

6. To draw out inputs of various equipments that is plant and machinery,

Stores & spares, land and building etc.

7. To keep down cost in all possible ways so as to get maximum profit.

8. To take care of housing, water supply, recreational, education, medical

& other facilities for the social security of employees to the extend it is

reasonable & practicable.

9. To maintain harmonious industrial relation.

10.To arrange for necessary fund and utilize that in the most advantageous

manner.

13 | P a g e

SUBSIDIARIES OF CIL

S.N NAME OF THE COMPANY H.Q STATE

1. Eastern Coalfield Ltd. (ECL) Sanctoria West Bengal

2. Western Coalfield Ltd. (WCL) Nagpur Maharashtra

3. Bharat Coking Coalfield Ltd.

(BCCL)

Dhanbad Jharkhnad

4. Central Coalfield Ltd. (CCL) Ranchi Jharkhand

5. South Eastern Coalfield Ltd.

(SECL)

Bilaspur Chattisgarh

6. Northern Coalfield Ltd. (NCL) Singrauli M. Pradesh

7. Mahanadi Coalfield Ltd. (MCL) Sambalpur Orissa

8. Central Mines Planning & Design

Ltd. (CMPDIL)

Ranchi Jharkhand

14 | P a g e

PIONEERING CONTRIBUTION

Over the Central Coalfield Ltd. has made pioneering to the Coal industry

in the following areas:

Detail contribution to establish minable Coal reserve.

Planned exploration coal reserve mainly in outlying areas.

Introduction of scientific method of mining through collaboration with

foreign countries.

Opening of large capacity underground and open cast mines

Training and skill development of large cadre of engineering,

technicians and executives.

Evolution modern management techniques.

Welfare of employee.

Community development and tribal welfare.

Resolving intra-company problem.

15 | P a g e

COMMAND AREA

The command area of CCL comprises of 10 Coalfields namely Giridih,

East and Bokaro, North and South Karnpura, Jayanti, Daltonganj,

Aurangabad, Hutar, Ramgarh and Kaitha. The total areas of these

Coalfields are appro. 2700 sq. kms, out of which based on techno-

economic consideration only 750 sq. kms, is amenable to mining

operation. All these Coalfields are located in the chotanagpur region of

Jharkhand.

16 | P a g e

COAL RESERVES

The total reserves of these Coalfields (Proves, indicated and

inferred) are around 34 billion tones, 14.023 billions tones of coking and

Semi-Coking variety and 19.539 billion tones of Non-Coking variety.

S.N AREAS H.Q COAL FIELD

1. Giridih Kargali Giridih/Jayanti

2. Dhori Dhori East Bokaro

3. Bokaro & Kargali Kargli East Bokaro

4. Kathara Kathara East Bokaro

5. Hazaribagh Charhi West Bokaro

6. Kuju Kuju West Bokaro

7. Argada Sirka South Karnpura

8. Sayal Sayal “D” South Karnpura

9. Barka Sayal Barkakana South Karnpura

10. North Karnpura Dakara North Karnpura

11. Piparwar Piparwar North Karnpura

12. Rajrappa Rajrappa Ramgarh

13. Rajhara Rajhara Daltonganj

14. Bokaro Coalfield Washries Kathara East Bokaro

17 | P a g e

MAIN FUNCTION OF CCL

To act toward achieving co-operative objectives and approve

review strategies for achieving these objectives.

To establish policies regarding long term planning, conservation,

research and development, finance, recruitment, training, safety

industrial relation, wages, marketing, purchase and stores.

To set target and monitor them.

To approve budgets, determine standard cost and retention price

and evaluate performances.

To co-ordinate among the subsidiary company.

To lay down over all policy regarding Coal distribution.

To establish board linkage to consumer to Coalfields.

To maintain liaison with major customers.

To make on behalf of subsidiaries, such as purchase of plants,

equipment of high unit and value in short supply.

All imports and export to be routed CIL, and to operate a common

cadre for CIL and its subsidiaries.

Under this recruitment of personal at the level of executives would be

done by CIL alone. CIL has to arrange training and to allot them to

companies. The subsidiary companies are responsible to deliver Coal,

maintain control and carry out after sale service, once the distribution and

board linkage are decided. Subsidiary company are also responsible to

realize sale proceeds of Coal bills. Coal India will be involved when

there are inter-company problems requiring common approach to

consumers carries etc…

18 | P a g e

PRESENT SCENARIO OF CCL

Numbers of Mines 63 Mines

(26 Underground & 37 Opencast Mines)

Washries 7 Washries

4 Medium Coking Coal Washries.

3 Non-coking Coal Wahries.

Workshop 1 Central Workshop

5 Regional Workshop (The central W/S & 3

regional W/S are ISO 9001)

Operating Coalfield 6 (East Bokaro, West Bokaro, North

Karanpura, South Karnpura, Ramgarh &

Giridih)

19 | P a g e

PRODUCTION

CCL has maintained an upward trend in production. The manual

production of raw Coal which was 15 million tones in 1973-74(the year

of nationalization) touched the level of 43.2 million tones in 2008-09.

The major challenge of increasing production however, came in the

aftermath of the re-organization of CCL’s jurisdiction in 1986, when two

or more Coalfields viz. Singrauli in M.P, U.P.& Talchar in Orissa went

cut of its jurisdiction with nearly 4C % of its annual growth in

production for many years.

OVERBURDEN REMOVAL

Since over 80.5% of the production is from open cast mines, overburden

removal is an essential part of production.

WASHING COAL

CCL has 7 Coal washries situated at Piparwar, Kedla, Kargali, Kathara,

Sawang, Gidi, Rajrappa with the total input capacity of 21.07 million

tones. Efforts to optimize the capacity utilization of these washries have

resulted in continued improvement in washed Coal production.

20 | P a g e

The table below shows the production and productivity figures achieved

by C.C.L during the year 2006-2007 as compared to the targets for the

year and actual of 2005-2006.

Particulars 2006-2007 2007-2008 2008-2009

Target Actual Target Actual Target Actual Production

From OC (MT) 39.970 39.364 42 42.31 46.75 41.68From UG (MT) 2.630 1.955 2 1.83 2.25 1.56TOTAL (MT) 42.000 41.895 44 44.14 49.00 43.24

(OC- Open Cast Mining, UG- Under Ground mining, MT- Million Tones)

Graphical presentation of comparison of last five years production and productivity in C.C.L.

YEARS

(Y-axis shows production in million tones and X-axis shows years)

21 | P a g e

DISPACHES TO CONSUMER

Among CCL’s major consumer are power house , steel plants, fertilizers

industries, cement plants, medium and small industries, bricks

manufacturers and domestic consumer.

Suitability of Coal

Industry Type of Coal Required

Steel making Coking and semi-coking coal, direct feed and washed; blendable coal; low ash % Assam and Ranigunj coal

Steel making, sponge iron industry Non-coking coal of high Initial Deformation Temperature (IDT) (>1200 degrees Celcius)

Cokeries / coke oven plants Coking and semi-coking coal

Briquette making / domestic fuel making

Semi-coking and non-coking coal; middling & rejects of washeries

Special Smokeless Fuel (SSF) Semi-coking coal of Coking Index 8 – 10

Power sector Non-coking coal; middlings of coking coal washeries; washed coal of non-coking coal washeries

Cement sector Non-coking coal; middlings of coking coal washeries

Glass and potteries Long Flame non-coking coal

Cast iron castings Hard coke

Steel castings Non-coking coal

Bricks Non-coking coal; middlings of coking coal washeries

Old boilers Non-coking coal; middlings of coking coal washeries

22 | P a g e

MARKETING

POLICY

MARKETING SET UP OF COAL

23 | P a g e

Marketing is very important branch of any organization. It plays the

dominant role in the strengthening of the organization. In case of coal

industry due to monopolistic market scenario, Coal marketing was not

much a problem in the past. However with the liberalization of the

economy and easy availability of imported coal by many consumers,

marketing is now playing a very important role in the entire operation

activities of Central Coalfield Limited (CCL).

CONSUMER OF COALCoal is fossil, is the prime commercial energy source in India. It

contributing 90 % of the total energy reduced and consumed. Coal India

is perceived to be the synonyms of Indian Coal Industry. The observation

about the global setting of the Coal sector is not fully reluctant in the

Indian context. Change in technology and change in mining method have

resulted in cost reduction in real term. With no significant breakthrough

in tapping non- conventional energy source in foreseeable future and

limited petroleum resources, coal continues to be main source of energy.

74.68%

2.35%

2.54%

0.68%3.25%6.76%

9.75%

POWERSTEEL CEMENTFERTILIZERSPONGE IRONCPPOTHERS*

SEGMENTATION OF COAL MARKET

24 | P a g e

In contrast to modern market scenario, Coal is the product with

difference. This is because after the nationalization of CIL, the customers

of Coal are widely dispersed all over the country and they are divided

into various based on sizes, consumption, characteristic and

requirements.

The various segment of Coal consumers are:

CORE SECTOR

Bulks of coal dispatched to the core sector. The segment consists of bulk

consumers, which contribute to the infrastructure development of the

country. The customers are power houses, steel plants and few coke

ovens. This segments account for 85% of the total consumption.

NON CORE SECTOR

After the core sector, the major consumer of Coal is non-core sector.

This segment includes industries like textiles, paper, chemicals,

fertilizers, re-factories, engg. Industries, foundries, glass, ceramic

industries etc. this segment consist of nearly 40,000 small industries and

medium scale industries having individual consumption of about 1000

tonnes to several tones per annum.

SEASONAL BUYERS

25 | P a g e

This segment consists of very small number of consumer of Coal in

particular season. The segment contributes 6 % of dispatch. Such

seasonal consumers are manufactures, tobacco farmers and tea gardeners.

DOMESTIC SECTOR

This is very small segment of consumers as compared with the

consumption of the other segment. But in the term of number, it has a

large number of consumers. This segment consists of more than 6 million

households consuming about 5% of the total market. Consumers are

mostly located in the states of Bihar, West Bengal, U.P., Delhi, Punjab,

Himachal Pradesh and other Northern states. Requirements of this

segment is totally met through intermediaries and other Northern states

COMPETITORS

26 | P a g e

The post nationalization years saw an increasing coal demand which

creates monopoly in coal. The managerial attitudes with ownership, with

a demand far exceeding the level of production of CIL and its subsidiary

organization, performance within Coal Industry had also declined. There

was little besides distribution of Coal that could be called True

Marketing.

At present the Coal Industry is not under a major threat competition even

with linearization of different sectors. It is expected that carrying on with

things as they are today. The coal industry shall remain in the monopoly

position for much as a decade. It is after this, that Govt. policy of

liberalization shall be felt in its fullest strength. This is because, by this

period, the private mines shall have positioned themselves in the open

market. Liberalization in our country is still in its initial phase.

27 | P a g e

MARKETING

MIX

PRODUCT

28 | P a g e

Central Coalfield Ltd. dealing with coal as a product is the third largest

Coal provider in the world. It provides many types of coal according to

buyer’s need.

There are two types of Coal, the company generally deals with:

Coking Coal

Non –coking Coal

Coking coal:-

The coal when heated in the absence of air, free from volatiles with

strong and porus mass is called coking coal. The features are as follows:

It is used for hard Coke manufacturing.

It is mainly used by steel companies and metallurgical industries.

The Coal has coking properties.

Non coking coal:-

The Coal which does not have coking properties is non coking coal. The

features are as follows:

It is mainly used for power generation by thermal grade

companies.

It is used by Cement, Fertilizers, Glass, Ceramic, Paper, Chemical,

Bricks manufacturing and other heating purpose.

29 | P a g e

Coal stock as on 31/7/2007 stood at 11.37 million tones.

The other types of Coal which the company deals with are as follow:

Washed Coal

Power Coal

Slurry Coal

Reject Coal

Soft Coal

Hard coal

Washed Coal:

Such Coal which have undergone process of coal washing causing value

addition of coal by way of reduction in ash percentage.

Power Coal:

Power coals are those coal which the company purchase for its own use,

i.e production of power for self use. It is mainly used by steel plants.

Slurry Coal:

Slurry are fine particle of coal which are generally used by brick making

companies.

30 | P a g e

Reject Coal:

Those coal which has more quantity of ash.

Soft Coal:

Soft coals are those which come from Dankuni Coal Complex using low

temperature carbonization of non coking coal in vertical resorts. These

are used in furnace plant, boilers industrial plants as well as power

houses, CIL Industries, pharmaceutical company.etc

Hard coal:

Hard Coal are formed from semi coking through the process

carbonization. It is mainly used in metallurgical industries and also

industrial plants.

On the basis of size, coal is of two types:

Steam form:

Steam forms are those which are more than 250 mm in size.

Slack form:

Slack forms are those which are less than 250 mm in size.

31 | P a g e

PLACE

32 | P a g e

PRICE

DOMESTIC PRICE FIXATION

Government of India deregulated the price of Non-Coking Coal of grades A, B & C. Coking Coal and semi / weekly Coking Coal on 22.03.1996. Subsequently, on 12.03.1997 Government of India deregulated the price of non- coking coal of grade D, hard coke and soft coke and also allowed Coal India Ltd. to fix coal price of grade E, F & G till jan 2000 once in every six months updating cost indices as per escalation formula contained in the 1987 report of the Bureau of Industrial cost and price. With effect from 01.01.200, CIL is free to fix the prices of such grades of coal in relation to the market prices.

Pursuant of the above, CIL fixed the prices of deregulated coal from time to time and last such revision has been made on 12.12.2007.

Grade wise basic price of coal at the pit head excluding statutory levies for Run of mine (ROM) Non long flame Coal, Long Flame Coal, Cooking Coal, Semi Coking Coal & Weakly Coking Coal, Direct Feed Coal, Assam Coal for various subsidiaries of CIL are table below:

Basic Price of Run of Mine Non-Long-Flame Non-Coking Coal

(In Rupees/ Tonne)

Field/ Co. A B C D E F G

ECL(for 8 units vide Annex II)

1710 1540 1290 1040 780 610 430

ECL / Mugma(for 16 units vide Annex IV)

1970 1750 1500 1240 990 740 480

ECL / Rajmahal - - - - 1020 870 700

BCCL 1660 1510 1250 1040 830 660 470

CCL 1620 1460 1220 1000 790 630 450

NCL 1490 1340 1100 920 740 580 430

SECL 1310 1220 1050 880 730 570 430

MCL 1280 1130 950 790 620 480 350

33 | P a g e

PROMOTION

Promotion is the development and discrimination of persuasive

communication about the offer designed to attract customers and to

persuade them to act. In its broadest sense it encompasses all selling

activities, personal selling sales promotion and publicity. A company

may have a well designed product, with a price and a distribution system

appropriate to its largest market hut if it is unable to reach that market

then all its default will have been in vain.

Too many consumers, promotion and selling are synonymous with

marketing, but promotion certainly represents a large part of the

marketing effort, but if it is of course only a part of the marketing mix.

The way various element of marketing mix come together depends upon

the marketing objective of the organization and therefore promotional

strategies must be made with reference these objectives. This means that

the rate of promotion in the marketing mix depends upon the role of the

other element of the marketing mix.

Therefore is a lot of promotional activities in GIL, in general and CCL in

particular. From time to time, they do advertising through media

regarding the quantity, quality, place and price of Coal available for sale.

The different distribution medium is also notified to the consumers

through media to make it convenient for them to buy the right type of

coal from the right place and on right price according to the equipment.

34 | P a g e

The company promotes the buyers’ be the services. The service provided

to the customer at the time of bidding through spot e-auction and forward

e-auction. Spot e-auction held four times in a month & Forward e-auction

held quarterly for long term requirement of the customer. Company

registered in MSTC site according to term and condition. After e-auction

date the product dispatch to their customer. Seven days before buyers

have to pay money for the e- auction.

35 | P a g e

WHAT’S NEW

New Initiative taken by Coal India Ltd.

CIL, with an impressive track record in meeting the energy

needs by registering a growth in production in excess of 5 %

annually over the years, is aiming at playing a more purposeful role

in establishing itself as prime supplier of energy to the nation.

In this respect, CIL has not restricted itself within the

conventional gamut of coal mining, but also exploring the

possibility of expanding its horizon in harnessing the potential of

non-conventional energy source as also to expand its pressure

beyond the boundaries of country.

The various initiatives already taken in this direction are

summarized below:

Coal bed methane (CBM)

CIL is involved in 2 CBM projects.

UNDP Demonstration project:

A demonstration project named “Coal Bed Methane’’ recovery &

commercial utilization has been taken by the Govt. of India in

collaboration with Unites Nation Development Program & Global

Environment Facility. The project has been sanctioned by Govt. of India

during Sept,1999 and the project is now under implementation at

sudamdih and Moonidih mines at BCCL. The present technical assistance

36 | P a g e

project draws on the recommendation put forth in India’s ninth Five Year

Plan recommending the development of new source of energy. The

UNDP-GEF project will support technical assistance and in country

capacity building in areas of methane recovery and use. Through

representative demonstration plants, the project will introduce advances

techniques of gas resources assessment and recovery and also utilization

method relevant for India Coal mining conditions. Drilling is in progress,

first bore hole drilled up to 1059.30.

CIL & ONCG JV

Govt. of India through has allotted 2 blocks. One in Raniganj and

Other in Jharia Coalfield approx. of 356 and 85 sq. km. respectively

on nomination basis to the consortium of CIL and ONGC. Work is

in progress. Petroleum Exploration license for both the block has

been obtained from respective state Govt.

At Jharia, 8 no. of slim hole drilling from GIL end is complete since

30.12.2004 by development of 3 Rigs.

A total of 8703.65 MT’s have been drilled since commencement.

CBM related test has been carried out.

At Raniganj CBM block, drilling startedon 26.05.2006 by

developing 2 drilling rings, one of CMPDI and one of NEC. A total

of 3982.50 MT’s have been drilled since commencement.

37 | P a g e

e- Marketing of Coal

The sale of Coal through e-auction scheme is considered to be the

most rational system of sale of Coal through which it is at the same time

objective, equitable, transparent and above all, beneficial to all those

users of coal who do not have official channel to purchase coal, either

because they were closed down and subsequently revived after fresh

effort and require Coal to start their operation.

Objectives of scheme

To provide equal opportunities to all intending buyers for purchase

of Coal / Coal products through single window service.

To provide wider choice of source, grade/ size, mode for all type of

customers including small customers / traders.

To facilitate creation of large no. of cutlets across the country for all

customers through customer-friendly system of sale of coal / coal

products making use of modern technology.

To evolve a market –driven Coal pricing mechanism through inter

play of market forces of demand and supply by shifting away from

administrative price regime. Buyer can get access to coal at self

determined prices.

To provide a legitimate channel of supply of Coal to an ever

growing no. of new industries, non-linked consumer with

snapped / lapsed linkage, customers requiring Coal above their

specified permissible quantities. If any seasonal consumer such as

brick manufacturers, SSI & tiny industries, cottage industrial or

38 | P a g e

any other buyers in distress and also buyers purchasing Coal for

resale purpose.

Coal India proposes to increase allocation Coal under e-

marketing, so that the market mechanization of price determination

based on supply and demand is just judiciously established.

Coal videsh

In India, techno-economically recoverable reverse of good quality

coking coal and high grade low ash non-coking coal are not adequate to

meet indigenous requirement and thus import of such coal has been

resorted to bridge the gap.

Since, demand of coal is increasing at faster rate, it is felt

necessary that CIL should venture for coal mining abroad, where such

coal is available, to facilitate bridging the gap. With this objective, it

has been proposed to form a separate company “Coal Videsh”. CIL

board has approved the proposal which needs approval of the Govt.

meanwhile, a dedicated “Coal Videsh” department consisting of

multidisciplinary team has been opened in CIL. The team has been

started visiting South Africa, Mozambique and Zimbabwe to explore

strategic business opportunities in these countries. CIL is also actively

pursuing business intelligence activities by closely tracking the business

opportunities in Australia, Indonesia and Russia.

39 | P a g e

Coal liquefaction

Coal India Limited had approached CIL to become a partner in its

venture of producing CIL from coal in its Duliajan plant in Assam and

requested for supply of about 3.5 mt p.a of coal NEC. CMPDIL has

prepared a report on possibilities of producing 3.5 MTPA coal from

NEC, GIL and CIL held a meeting to discuss future possibilities on July

11, 2005 wherein CIL indicated that the tentative cost of production of

CIL obtained from this process is about US $ 35 per barrel which

appears to be quite attractive particularly view of bargaining CCL price

in international market which has reached up to US $ 65 per barrel. It

has decided to form a “Joint Task Force” of GIL which would study the

CMPDI report for possibility of coal production of 3.5 MT p.a from

NEC and examine enhancement of scheduled of production, examine

possibility of formation of 2 joint venture, 1 for coal production find

other for setting up of Coal Liquefaction plant and its upstream activities

Underground Coal Gasification (UCG)

UCG is the in-situ gasification of coal in the seam. It is achieved by

injecting oxidant, gasifying the coal and bringing the product gas has to

surface through bore holes grill from the surface. The gas is used for

power generation, industrial heating or as chemical feedback.

Coal India has given high priority to the issue of UCG. CIL and

ONGC are likely to take up jointly a pilot project for establishment

UGC technology. A MOU has been signed between CIL & ONGC 3rd

Nov, 2005. Further drilling for additional data generation is one of the

prospective which is been taken up. Initial work of data exchange,

needed for identification of trial site, has already been taken up.

40 | P a g e

Over ground Coal Gasification (OCG)

Director (planning and business development), GAIL (INDIA) Ltd.

may director (Technical) Coal India Ltd. on 20th July 2005 in

connection with their interest to make a JV with CIL for joint

evaluation of work in various Coal sector related potential

opportunities.

A draft memorandum of corporation (MOC) has been drafted. MOC

includes the scope of work for this JV in the field of over ground Coal

Gasification, CIL and GAIL have taken up drawing of a road map to

accomplish the objective jointly in right earnest.

Power Plant

CIL is also contemplating setting LI of power plant JV. In this

connection, CIL is in negotiation, with both NLC & NTPC for power

plant in Orissa.

Switchover – categories of Coal from UHF to GCV

Effort are being made to assess the possibility of making the

categorization of coal from UHF basis to GCV basis, trial are being

conducted at MCL & NCL result of which are yet to be obtained.

41 | P a g e

COAL NET

Coal India had taken initiative in development and implementation of

COAL NET. Application S / w an integrated solution, to bring

uniformly across its subsidiary companies and entrusted the activities to

IIT, Kharagpur in the year 2001. The application s/w has been

developed and implemented at CIL and is subsidiary (HQ’s). Necessary

LAN has been set up at respective subsidiary (HQ’s) for COAL NET

s/w. the same is being upgraded for faster access of application data.

Telecommunication link have been set up over satellite media

(VSAT system) and leased lines of BSNL interconnecting CIL HQ’s,

subsidiary HQ’s and MOC for voice, data and video conferencing in an

integrated manner for seamless flow of information over the network.

Similarly rollout of network is under process of implementation for 11

extending such facilities from subsidiary HQ’s to area offices, regional

stores, projects, Coal loading points etc.

Considering significant role of telecommunication and IT in

providing a proper decision support system at area level, CIL has been

and MCL for implementation of Coal Net application software.

Necessary infrastructure preparation has been carried by respective

subsidiary and implementation is in progress, initiative has been

communication.

42 | P a g e

DISTRIBUTION(METHODS & PROBLEM)

FACTOR AFFECTING CHOICE OF TRANSPORT METHOD

The type of Coal to be transported.

The amount of Coal to be transported.

The distance to be transported.

The facilities at the loading point.

The facilities at the consumer’s premises.

The access at the consumer’s premises.

The number of transfers involved which may cause degradation

of coal.

AVAILABLE MEANS OF TRANSPORT

RAIL

Largest users including Power sectors may be able to make use of

rail transport which is often organized on merry go round system.

Where the same rolling slack, designed for rapid loading and

unloading, travel between supply point and the consumer.

ROAD

Small proportion of Coal used by the industries is carried by road.

The commercial vehicle used for this purpose differs mainly in the

method of unloading.

43 | P a g e

WATER

In the past coastal city and inland water ways were used extensively

for transportation of Coal, by this method has been almost supersedes

by the kind transport.

CONVEYOR

Some very large power one losses built adjacent to Coal preparation

plants can be supplied directly by conveyor, but that is rare.

PROBLEM IN TRANSPORTATION OF COAL

Railways

Roadways

Problem in railways transport

Currently 75% of total dispatches are by rail transport. Hence

railways are the most importance means of transport of Coal & Coke.

It is paradoxical that Coal India has added 6 million tones of Coal to its

slack, even then consumers were in distress due to the scarcity of

Coal/Coke; Coal India official blame railways for the letter’s inability

to supply adequate no. of wagons passing the buck is a time honored

preoccupation of the railways of Coal authorities. While railways

speak man complain of loading wagons, CIL officials periodically site

instance when the railways send to many wagons to a particularly

loading point on a day when workers are always on holidays and the

complain in the next day at the press conference about how scores of

wagon lies unloaded.

44 | P a g e

Problems in roadways transport

According to estimates made by the COAL INDIA about 20% of the

dispatches are made by the road. CIL does not encourage the road

dispatches due to its certain disadvantages. This cost is substantially

higher than the rail freight. Due the increase in the CIL prices the cost

of road transport has increased which ultimately affect in the increase

of the landed price of coal and coke. Consumers whose requirement

cannot be met due to the poor wagon supply are constraints to life by

road by paying higher prices. Road transport may not be considered

uneconomical within a 100 km radius of the pithead, but at a time

when factories in North and South India, thousand miles away from the

pitheads, are transporting by truck the current practice goes completely

again the professed intension of the Govt. energy policy, which aims at

minimizing CIL consumption and maximizing Coal consumption.

45 | P a g e

NEW COAL

DISTRIBUTION POLICY

46 | P a g e

NEW COAL DISTRIBUTION POLICY

As we already know that there are two types of sectors i.e. Core and

Non-core. The CIL and Govt. of India approve the new coal distribution

policy which is as follows:

(1) Classification of consumers:

Classification of consumers into core and non-core has been

reviewed instead of each consumer would be treated on merit

keeping in view, inter-alia the regulators provisions applicable there

to and other relevant factors.

(2) Distribution and pricing of coal to different consumers sector

Defense sector and railway will get total of their Coal

requirement at notified price.

Power utilities including independent power plants, captive

power plants (CPP) and fertilizer sector 100% of quantity as per

the normative requirement of the consumers would be

considered for Fuel supply agreement (FSA) by Coal India Ltd.

at fixed price to be declared. The unit/power plant which are yet

to be commissioned but whose coal requirements has already

been assessed and accepted by ministry of coal and linkage/

letter of assurance (LOA) approved as well as future

commitment would also be covered according.

47 | P a g e

(3) Other consumers:

We know that 75% of the quantity as per the requirement of the

consumer / actual users would be considered for supply of coal through

e- auction at Notified price, to be fixed and declared CIL. The

remaining 25% of coal get by e-auction as per their preference.

At present small and tiny consumers in Non-core sector, whose

Annual consumption is less than 500 metric tones are eligible to get

coal through state nominated agencies/NCCF etc. the minimum

quantity through state agencies is 400 tones per annum will take coal

through Coal India Ltd. subsidiary companies through FSA’s. for the

non-core sector and annual requirement is less than 4200 tones, they

have to be entered in FSA by showing satisfaction level document of

they to go state guises.

(4) Small consumers & medium consumers:

Small & medium consumers like smokeless fuel brick kiln etc.

have to be registered under FSA with coal companies by the state govt.

agencies.

Till further the state Govt. notified the agency, the fuel supply

agreement would be based on firm commitment and compensation for

default in performance on either side.

The price charged to such agency would be the same as notified

price as applicable to other consumers. The agency may charge freight

up to 5% margin as service charge. The quantity allocated to this sector

may be received on the basis of their performance in the beginning of

every year. Allocation of quantity is based on the consumption pattern

in past.

48 | P a g e

(5) Replacement of linkage system by Fuel Supply Agreement (FSA):

If the buyers do not maintain continuation in FSA with six month

in a year then they may be allocated the coal at auction.

(6) Policy for new consumers:

New consumers have to be allocated the coal after issuing letter

of assurance (LOA) valid for 24 month for power sector. After issuing

letter of assurance they have to enter FSA and then FSA would be

completed within three months. For allocation they have to deposit

‘’Earnest Money Deposit’’. If EMD failure occurs, then 5% of the

value is kept.

(7)Letter of assurance for new consumers:

New consumers from state, central power utilities, CPPS,

Independent power producer, fertilizer LOA, are based on prevailing

norms and recommendation of administrative ministry.

All other consumers may be issued LOA by CIL. LOA will be

issued by CIL to the applicant consumers consequent upon payment

of EMD to the coal company. The amount of EMD could be initially

issued at 5% value of annual coal requirement. However, CIL may

decide a different level, based on various facts the approval of board

of directors. Loading will be valid for a period of 12 to 24month as

applicable and if after paying buyers reject the order then that

amount will be forfeited.

49 | P a g e

(8)E-auction of Coal

Coal distribution through e-auction was introduced with a view to

provide access to coal for such consumers who are not able to source

coal through the available institutional mechanisms for reasons like the

seasonality of coal requirement, limited requirement of coal not

warranting long term linkage etc. In long run, it is expected that e-

auction may help in aerating spot as well as future market of coal in the

country so there is some fresh scheme of e-auction will be introduced.

a) Any buyer will be entitled to buy coal under auction.

b) Coal Company may be allowed to fix undisclosed reserve price

not below the notified price.

c) E- auction should be announced well in advanced and be given

wide publicity to all consumers who intend to participate.

d) In order to address the concern of such industrial consumers who

wish to have an assured supply over a long period, say one year

CIL will earmark a fixed quantity which will be provided to

highest bidder/ bidders as per bidders requirement during the

time of bidding

50 | P a g e

FINDINGS

51 | P a g e

After analyzing studying the whole aspect of Central Coalfield Ltd. when

engaged in the job training, I found the following.

As we know India is the third largest Coal producing country. It

contributes around 85% of coal production in India. It is the largest company

in the world in term of coal production. It employs nearly 425 lacs persons

and is the largest corporate employer in the country. Coal India Ltd. is one

of the largest companies in the country, turnover being around Rs. 38631

billion in 2007-08. It is one of the largest tax payers (corporate tax Rs. 35.7

billion) in 2007-08.

From the above, I analyzed that Coal India Ltd. provides positive

economic condition to the country. Firstly according to me, it employee lacs

of people. It feels proud for the country people as it produces 85% Coal by

which many company depend for its production. One of the most important

things about the Coal India that in our country the highest percentage of

power produce by Coal, if there is no Coal we can’t imagine about

electricity. We have to depend on thermal electricity and for depend on other

electricity as it paid 35.7 billion tax to the government. The money is used in

many services like hospital, school, and man. As it provide many facility to

their employees like medical facility, school facility, home to live electricity,

water and many stall service etc. I also found that the present sales and

distribution system which is also known as linkage system is very much

effective rather than the previous sales system which was fuel agreement

system.

52 | P a g e

CONCLUSION

53 | P a g e

After analyzing above the company I come to the following conclusion

which is as follow: first it is very interesting to know that this company is

the third largest coal producing country. It gives opportunities to 4.25 lacs

employee and their needing facility.

It also contributes in shaping the country by paying tax. The profit is

also good but the profit is not shown of maximum. As want to say

something about the price release for the coal to buyers. Per tone price is

very cheap and the buyers release the products at maximum price. It is

very good because if company releases at highest price then the coal

related products like electricity price is more. It is very good aspect that is

under the Government of India, if it is under the private sector then he

creates monopoly in the country. The Coal distribution Policy is very

effective and auction is very interesting for the buyers. The company also

takes positive decision that it not involves in service to the buyers like

transport, material handling, and logistics supply chain etc. company gives

time to receive the coal within 45 days.

And at last I want to say that this company received award of Mini

Ratna and step toward Nav Ratna.

54 | P a g e

BIBLIOGRAPHY

http://ccl.gov.in/biz/sales_market.htm

http://www.coalindia.in/ContactUs.aspx?tab=2

http://coal.nic.in/

http://ccl.gov.in/

http://www.bccl.cmpdi.co.in/OB Sales&Mkt.htm

55 | P a g e