SUBMITTED TO HRD OF BCCL KALYAN BHABAN DHANBAD (JHARKHAND)

SUBMITTED BY NAME: ANISH KUMAR SINGH ENR NO: MMR 5039

Ishan Institute of Management & Technology 1A, Knowledge Park-I, Greater Noida, Dist.- G.B. Nagar (U.P.) Website: www.ishanfamily.com Email: student@ishanfamily.com

ACKNOWLEDGMENT

This project has been prepared as a part of an internship required during the completion of PGDMM programme at Ishan Institute of Management & Technology, Gr.Noida (U.P).

I was involved with BHRAT COCKING COAL LIMITED Koyla Bhawan , Koyla Nagar Dhanbad Head Quarter of Company, for a period of 8 weeks, and I came across a lot of people who put in their time and effort towards acclimatizing me to the workings of their organization. I express my thanks to my project guide Mr. Lalit Ukey , who was there to introduce me to the idea of coal business and what goes behind it. Also under his guidance and leadership I was able to enhance my marketing as well as inter-personal skills. I would also like to thank him for his immense support and guidance in the selection of the project, its study and preparation of the report.

Last, but definitely not the least, I express my gratitude to the entire staff of BHARAT COCKING COAL LIMITED.

These past 8 weeks were of utmost importance as they added value towards my pat of h knowledge. I would like to end this acknowledgement by thanking the customers, distributor people at large with whom I have interacted during the course of my training.

PREFACE There are number of forces that make marketing an endlessly changing activity. The constantly changing activity sociological, psychological and political environment may

represent the uncontrollable marketing factors. To understanding these factors in a better way marketing research is of utmost importance This Project Report has been completed in Partial fulfillment of my management Program, Post Graduate in Marketing Management (PGDMM) in the company BHARAT COCKING COAL LIMITED. The tittle of my project was A STUDY OF BUSINESS ASPECTS OF BCCL.

BHARAT COCKING COAL LIMITED is the name which is working as one of the best public company in coal sector.

DECLARATION

The summer training project on A STUDY OF BUSINESS ASPECTS OF BCCL under the guidance of Mr. Lalit Ukey is the original work done by me. This is the property of the Institute and use of this report without prior permission of the Institute will be considered illegal and actionable. .

DATE: PLACE

NAME OF STUDENT ANISH KUMAR SINGH ENR MMR 5039,

Table of Content

1.Introduction on CIL 2.Introduction on BCCL 3.Organization History 4.Mission & Vision 5.Product 6.Structure 7.Leadership 8.Department 9.Conclusions 10.Recommendations

About coal Coal is our most abundant fossil fuel resource. Coal is a complex mixture of organic chemical substances containing carbon, hydrogen and oxygen in chemical combination, together with smaller amounts of nitrogen and sulfur. This organic part of coal has associated with it various amounts of moisture and minerals. Coalification is the name given to the development of the series of substances known as peat, lignite or brown coal, sub-bituminous coal, bituminous coal, and anthracite. The degree of coalification, also called the rank of the coal, increases progressively from lignite to low rank coal, to high rank coal, to anthracite. The carbon content increases, while the oxygen and hydrogen contents decrease throughout the series. The hardness increases, while the reactivity decreases. Different amounts of heat and pressure during the geochemical stage of coal development cause these differences in rank. It is not due to the kind of plants the coal is formed from. Major coal area in India The main places are in Jharkhand. Jharia coal fields of Jharkhand are one of the biggest & on Indian map will come between UP & Nepal.

EXECTUIVE SUMMERY

The project is concerned with the A STUDY OF BUSINESS ASPECTS OF BCCL Work procedures are dealt in detail along with their drawbacks and scope of improvements in the field. All the work instructions are dealt in detail and suggestions are made wherever there is a scope of improving on the quality of the product and services provided to the market and consumers.

Marketing management is creating a revolution in marketing of products and services providing to the market and consumers of the organization throughout the world. This is one of the leading Indian media sectors organizations which have grasped quality mettle and have successfully, ridden business recessions and annihilate the competition.

Marketing management is a powerful tool for achieving organizational goals and gaining competitive advantage. Summer training project goal is to help students become effective managers in todays competitive, global environment. The fundamental unit of work in all organizations is processes; the focus of the project is on the different marketing processes in the field of marketing of the organization. Emphasis is given on discovering the challenge of both managing and understanding the interrelatedness of activities throughout the organization, and how the marketing functions fits into the organization.

MY EXPERIENCE WITH BHARAT COCKING COAL LIMITED

These 8 weeks with BCCL are unforgettable for me. The experience, which I got during these days, was tremendous. I have made good relationship with so many people in frontline division where I did my project & other division. Everybody over there I found nice & helping. I also made some good friends of other B-schools who were also management trainee there. I faced the odd situation in working life & got the developed an adoption quality. The main thing I got from my project was to interact with various people.

Really, the experience I have got from my project will be very helpful to enrich and nourish my career.

MY LEARNINGS FROM THE PROJECT It is very important in organization to have clarity of roles and unity of command. I observed that this feature was not focused upon in branch after an organizational restructuring. Employee at the branch was not very clear about the reporting mechanisms, the flow of command and formal authority. This had an negative effect on employee moral irrespective of the leadership. Impact on entry level employee was the most, they ended up being frustrated because unclear authority and command.

Generally organizations focus more on either marketing or finance in the organization and make the Endeavour to make these functions as efficient as possible. But in the process they dont have much focus on operations. I find operation at BCCL inefficient and wanting. They have serious complication on functioning and loss of business to competitors. I believe that this function should also be provided be given more attention and should be equipped with not only better technology but also more efficient work force.

During my summers at BCCL, I was fortunate enough to experience two different kind of leadership style. Not commenting on any one it , I just want to say that they had major impact on the way the branch function, level of satisfaction of employees , cost cutting, and most important of all revenue generated. So leadership is one area where top management should be very careful and focused as they form important part of any organizational success.

COMPANY PROFILE

January 1972, Bharat Coking Coal Ltd (BCCL) was incorporated in January, 1972 to
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Operate coking coal mines (214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on 16th Oct, 1971 to ensure Planned development of the scarce coking coal resources in the country.

Chairman-cum-Managing Director

: shri T.K.Lahiri

Currently, the Company operates 81 coal mines which include 40underground, 18 opencast & 23 mixed mines. The Company also runs 6 coking coal washeries, 8 noncoking coal washeries, one Captive Power Plant (2x10MW), and 5 by-product coke plants. The mines are grouped into 13 areas for administrative convenience. The total manpower as on 31.05.2011 was 65,858. BCCL was a terminally sick company having suffered losses consistently since inception aggregating to Rs.10209 Crores without taking credit of Rs.3165 Crores received during 1982-83 to 95-96 under Retention Price Scheme from other coal companies. The cumulative loss as on 31.3.05after taking credit of the above is Rs. 7044 Crores. The net worth as on 31.305after adjusting the paid up equity of Rs. 2118 Crores is (-) Rs. 4926 Crores. Now its annual profite goes up to 1093 crores. BCCL was incorporated in January, 1972 to manage and operate the taken over coking coal mines.Bharat cocking coal Limited (BCCL) is a Public Sector Undertaking engaged in mining of coal and allied activities. It occupies an important place in as much as it Produces bulk of the coking coal mined in the country. BCCL meets almost 50% of the total prime coking coal requirement of the integrated steel sector. It also supplies substantial quantity of coal to the pig iron sector and bulk of the coal requirement of the power station in the Northern region. BCCL's area of operation falls in Jharia Coalfield and in a part of Ranigaunj Coalfield in the State of Jharkhand.Its activity extents into a small area in West Bengal also wherein it operates two of its coal mine. Its area of operation is speed over 270 Sq.Kms. of the Jharia Coalfield and 32 Sq. Kms.in the Ranigaunj Coalfield.

HEADQUARTER WITH ADDRESS: BHARAT COKING COAL LTD.

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Koyla Bhawan Dhanbad , Jharkhand, India0326-2230133-37 Phone no - 0326-2230133-37 Fax 0326-2230153.

Email- bcclcmd@cmpdi.co.in Website- www.bccl.cmpdi.co.in

HEAD OFFICE WITH ADDRESS: COAL INDIA LIMITED 10 Netaji Subhas Rd, Kolkata, W.B-700001, Indi Phone noFax 033-2248-8099, 033-2243-5147 033-2243-5316

Email:-telecil@cal2.vsnl.net.in cil@wb.nic.in Website www.coalindia.nic.in

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Coal C l Mi i t ti i ti iti

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2.Bharat Coking Coal Li ited (BCCL Dhanbad, Jharkhand C t lC l i l t t t i it CC i it C R C i C tti M

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C li l i it

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6.Northern Coalfields Limited (NCL), Singrauli, Madhya Pradesh 7.Mahanadi Coalfields Limtied (MCL), Sambalpur, Orissa 8.The consultancy company is Central Mine Planning and Design Institute Limited (CMPDIL), Ranchi, Jharkhand

9.Coal India Africana Limitada, Mozambique. 10. North Eastern Coalfields (NEC) a small coal producing unit operating in Margherita, Assam is under direct operational control of CIL. .

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ECL

BCCL

CMPDI

CCL

CIL NCL WCL

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SECL

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1774 :

10 Coal In ORGANISATION HISTORY: Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its headquarters in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines (214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on 16th Oct,1971. Currently, the Company operates 78 coal mines which include 41 underground, 16 opencast & 21 mixed mines. The Company also runs 7 coking coal washeries, 3 non-coking coal washeries, one Captive Power Plant (2x10 MW), and 5 bye-product coke plants. The mines are grouped into 13 areas for administrative convenience. BCCL is the major producer of prime coking coal (raw and washed). Medium coking coal is also produced in its mines in Mohuda and Barakar areas. In addition to production of hard coke, BCCL operates a number of sand gathering plants, a network of aerial ropeways for transport of sand and nine coal washeries, namely, Dugda, Mohuda, Bhojudih, Patherdih, Lodna, Sudamdih, Barora, Moonidih and Madhubhan.

Projects undertaken A fast track plan to develop the virgin 15th seam at Moonidih for a 2 mtpa coking coal mine by introducing State of the Art high capacity PSLW has been initiated. For opening up a large opencast mine, steps have been initiated for development of Kalyaneswari Project on fast track to produce 2 mtpa medium coking coal plus 3mtpa non coking coal.

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Action has been initiated for amalgamating North & South Tisra to develop a 5 mtpa OC mine. To handle the augmented raw coking coal production, a detailed plan of action for modernization of coking coal washeries, approved by the Board, has been taken up for implementation. Decline in production from underground mines is a grey area, which remains a major cause of concern. A plan for amalgamation of small mines into a few large mechanized underground mines is being contemplated and is in planning stage.

Steps taken 1) A major step forward was to internalize market premium on coal sold to non core sector by introducing internet based e-marketing to establish free, fair and transparent access to coal for all consumers. 2) Taking over the Dhanbad-Patherdih Railway line on fire, dismantling railway line to commence coal production by digging out the fire with hired HEMM was another major initiative in this direction. 3) A revival plan was formulated in February 2004 with an objective to reverse the trend and implement on a fast track, activities required to arrest and reverse trend of fall in coal production on one hand and focus on value addition on the other. 4) Besides the above a few other initiatives have been taken to improve work culture by introducing faster decision making, streamlining back up services such as procurement of materials in time to minimize stock out of production holding and safety items, end to dead body politics, introduction of 100% payment to workers through banks etc.

FEATURES:y

The Company has its headquarters at Dhanbad in Jharkhand. It had under its charge nationalized Coking Coal Mines and two mines namely Moonidih and Sudamdih transferred to it from the erstwhile National Coal Development Corporation Ltd. All these mines were re-organized into units/areas for administrative and operational convenience.

BCCL is the major producer of prime coking coal (raw and washed). Medium coking coal is also produced in its mines in Mohuda and Barakar areas. In addition to
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production of hard coke and soft coke, BCCL operates a number of sand gathering plants, a network of aerial ropeways for transport of sand and, nine Coal Washeries, namely Dugda - I, Dugda - II, Bhojudih, Patherdih, Lodna, Sudamdih, Barora, Moonidih and Rohula.

BCCL was referred to BIFR on 24.11.95 u/s 15(1) of SICA as its net worth became negative as on 1.4.95. As a result of the internal capital restructuring among the CIL subsidiaries, an amount of Rs.996 crores of BCCLs debt to CIL was converted into equity and therefore BCCLs equity increased from Rs.1122 crores to Rs.2118 crores. Though this increase of equity (paid up share capital) was taken in the audited accounts of BCCL as on 31.3.98, on the basis of advance information given to BIFR, they agreed to take BCCL out of their purview in the hearing dated 22.12.97. BIFR, however, observed that, as the accumulated loss of the company was still more than 50% of its enhanced paid up share capital and the company continued to make losses, BCCL would continue to be under watch by BIFR u/s 23 of SICA.

Performance PRODUCTION (Figs in Million Tonnes) Compan y Type 2009 1974 1984 1994 2001 2002 2003 2004 2005 2006 2007 2008 - 10 - 75 - 85 - 95 - 02 - 03 04 - 05 06 - 07 - 08 - 09

U/G BCCL OC

15.6 13.3 11.4 7.59 7.29 6.74 6.38 5.47 4.90 4.46 4.13 3.9 4 4 9 2.10 8.50

17.2 17.6 16.8 15.9 15.9 17.8 19.3 20.7 21.3 23.6 6 6 6 4 4 4 0 5 8 1 TOTA 17.7 21.8 28.7 25.2 24.1 22.6 22.3 23.3 24.2 25.2 25.5 27.5 L 4 4 5 5 5 8 2 1 1 1 1 1

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Coal Reserve

COAL RESERVES IN INDIA : (As on 1st April, 2009) (in billion tonnes) Total Reserve Coking Non-Coking Total 33.4 233.8 267.2 Proved Reserve 17.5 88.3 105.8 Indicated Reserve 13.8 109.7 123.5 Inferred Reserve 2.1 35.8 37.9

Vision: To emerge from the position of domestic leader to leading global player in the energy sector by adopting best practices from mine to market with due care to environmental and social sustenance.

Mission: Produce the planned quantity of coal efficiently and economically with due regard to safety, conservation & quality.

Product of B.C.C.L.

1. Coking coal - for use in Steel Plants. 2. Non linked washery coking coal- for other industries. 3. Semi Low Volatile (SLV) Coal. 4.Non coking coal - for power houses, fertilizer and cement plants etc. 5. Washed coal - for Steel Plants.
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6. Washery middling - for power plants. 7. Washery slurry and rejects - for brick kilns and other industries. 8.Hard coke- for defence, locomotive and other industries 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.
y y y

These have coking properties Mainly used in steel making and metallurgical industries Also used for hard coke manufacturing

2. NLW COKING COAL: This coal is not used in metallurgical industries. Because of higher ash content, this coal is acceptable for washing in washeries. This coal is used for power utilities and non-core sector consumers. 3. 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.
y y

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

4. NON-COKING COAL: These are coals without coking properties.

y y

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.
y y y

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.
y y

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.
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8. HARD COAL: Hard coke is formed from coking / semi-coking coal through the process of carbonization.
y y

Mainly used in metallurgical industries. Also used in industrial plants utilizing furnaces.

GRADATION OF COAL A. COKING COAL Grade Steel I Steel II Washery I Washery II Washery III Washery IV Parameter Ash not exceeding 15% Ash exceeding 15% but not exceeding 18 % Ash exceeding 18% but not exceeding 21 % Ash exceeding 21% but not exceeding 24 % Ash exceeding 24% but not exceeding 28 % Ash exceeding 28% but not exceeding 35 %

B. SEMI COKING COAL Grade Semi Coking I Semi Coking II Parameter Ash + moisture not exceeding 19 % Ash + moisture exceeding 19 % but not exceeding 24 %

C. NON-COKING COAL Grade A B C D E F G

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UHV RANGE (KCALS/KG) Exceeding 6200 Exceeding 5600 but not exceeding 6200 Exceeding 4940 but not exceeding 5600 Exceeding 4200 but not exceeding 4940 Exceeding 3360 but not exceeding 4200 Exceeding 2400 but not exceeding 3360 Exceeding 1300 but not exceeding 2400

D. HARD COKE Grade By Product Premium By Product Ordinary Beehive Premium Beehive Superior Beehive Ordinary Ash % Not exceeding 25 % Exceeding 25 % but not exceeding 30 % Not exceeding 27 % Exceeding 27 % but not exceeding 31 % Exceeding 31 % but not exceeding 36 % SUITABILITY OF COAL E. HARD COKE Industry Steel making Type of Coal Required Coking and semi-coking coal, direct feed and washed; blendable coal; low ash % Assam and Ranigunj coal Non-coking coal of high Initial Deformation Temperature (IDT) (>1200 degrees Celcius) Coking and semi-coking coal Semi-coking and non-coking coal; middling & rejects of washeries Semi-coking coal of Coking Index 8 10 Non-coking coal; middlings of coking coal washeries; washed coal of noncoking coal washeries Non-coking coal; middlings of coking coal washeries Long Flame non-coking coal Hard coke Non-coking coal Non-coking coal; middlings of coking coal washeries

Steel making, sponge iron industry Cokeries / coke oven plants Briquette making / domestic fuel making Special Smokeless Fuel (SSF)

Power sector

Cement sector Glass and potteries Cast iron castings Steel castings Bricks

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Old boilers Halwais, domestic use, hotels, etc.

Superior grades of non-coking coal Non-coking coal; CIL Coke / LTC Coke

Organization Structure:The structure of BCCL is classified in a tree format from Board of directors CGM(Coord.).It will be more clear through the under figures.

Leadership:BCCL lead by dynamic leader Mr.T.K.Lahiri - chairman-cum-Managing Director. He recently join as technical soon, after he also resume for CMD. His dynamic leadership efforts & ideas has turn around the company from loss running organization to achievement of Rs.793 crore during financial year 2009-2010.He with his flagship shown the path to achieve profit for their work during the current year with improvement in production despatch & productive of coal. He was instrumentally introducing himself under corporate social responsibility for which he acclaimed from ministry of coal.

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Consumers of B.C.C.L

Major consumers:1. Power (DVC, WBPDCL, NTPC) and 2. Steel sectors. Others:1. Cement, 2. Fertilizer, 3. Brick Kilns, and 4. Small scale industries About the Project Introduction:This project is on B.C.C.Ls sales and Marketing of coal. It is all about the Marketing of B.C.C.L through E-Auction. E-Auction is mainly related to marketing and the traffic of B.C.C.L means the sales through roadways and railways. Once the order of customer is passed or the biding of coal is done the dispatch of coal is done through rake (59 boxes of goods carrier). The customer takes the delivery of coal through R.R (Railway Receipt) +E.P (Electronic Printout). Rationale behind choosing the project:The main reason behind choosing this project is that the B.C.C.L is one of the highest coals producing in India. Lignite, Bituminous and Anthracite are the main coal found in India which build the economic development of country. Our country is a mixed economic country and mostly depends on its minerals, every sector depends upon the energy and the coal fulfills the requirement, as per the customer requirement the dispatch is done and we mostly depends on it, our life is fully round with coal

Topic: Marketing, Sales & distribution of coal of BCCL Sales and distribution of coal in mostly done through railways and roadways. The minimum quantity of coal in a box of rake i.e.in railways is 6 tons, which is 5 times more than a roadway caring. The customer like steel co., power co., fertilizer co., chemical co., purchased the coal as per their requirement as per FSA (Fuel Supply Agreement).the 10% of dispatch of coal can be sale through e-auction.

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 What is Marketing, sales & distribution of coal of BCCL? Sales and distribution of coal of BCCL means selling of coal to the different company like steel co., power co., fertilizer co., chemical co., lime factories defence etc. the different grade of coal is been sold through e-auction /through FSA .The coal is distributed by the siding of BCCL through the railways rakes.  Why is Marketing, sales & distribution of coal of BCCL important? Sales and distribution is important because its a monopoly company and have no competitors in own country, only have international competitor but it does not face the competition because it does not export his product to other country. the country mainly depends on coal for producing power, energy, steel, fertilizer or the every thing that need carbon for producing another goods, it also support economically to the country, Because there is link between each one.

 Highlights of Marketing, sales & distribution of coal of BCCL Marketing, sales and distribution is mainly related to the section and division of sales and marketing of B.C.C.L.it includes various sections of marketing.i.e.1. 2. 3. 4. 5. 6. Sales control planning/e-auction. Traffic Road sales Realisation Sales accounts Linkage

 Sales control planning/e-auction E-auction of coal Coal distribution through e-auction was introduced by CIL 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 coal linkage etc. Under NCDP, about 10% of annual production of CIL has been earmarked for offer under e-auction. During the period from April 08 to
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October, 08 CIL offered a quantity of about 57 Million Tons of Coal as compared to 16 Million Tons offered during the same period of the previous year. Sales control planning/e-auction is mainly related to the marketing of the coal of BCCL through online to the customers. Those who have not FSA under ACQ basis. The FSA is done in two different years i.e. 5 years for Non core sectors (private)& 20 years for Core sectors (public).it will be clear through the under data.

COMPANYWISE PERFORMANCE OF E-AUCTION OF RAW COAL IN CIL FOR MARCH10 (PROVISIONAL) COMPANY No. of No. of NAME Bidders Succe ssful Bidder s ECL 432 353 BCCL 2954 1377 CCL 1274 716 NCL 169 118 WCL 942 620 SECL 872 602 MCL 361 318 NEC 55 37 7059 4141 CIL Total qty.offere d (L tons) Total qty.allocate d (L tons) Average Notified Price of Total qty.allocated(i n Rs/Ton) 2150.526844 1427.772887 1330.019322 1282.26087 1419.212089 926.5950245 713.1253035 3135.141509 1068.580873 Average Bid Price of Total qty.allocated( in Rs/Ton) 2877.471149 2469.322183 1927.560162 2423.478261 1938.352222 1792.858352 1003.14473 4632.783019 1664.986778 % Increase Over Notified Price 33.80307979 72.94922778 44.92722998 89.00040689 63.57946105 93.48888179 40.66878927 47.76950275 55.81289362

2.225 2.292 6.553 1.15 5.63 11.818 23.16 0.455 53.282

1.993 2.272 5.693 1.15 5.559 11.818 16.472 0.424 45.38

Some of the small sector company purchase the coal by e-auction.the e-auction is classified into two categories i.e.:1. spot e-auction 2. Forward e-auction  Spot e-auction Terms & Conditions of Spot e-Auction Scheme 2007 Objective: Coal distribution through e-Auction has been introduced with a view to provide access to coal for such buyers who are not able to source coal through the available institutional mechanism. In the long run it is expected that e-Auction may help in creating spot as well as future market of coal in the country. The purpose of e-Auction is to provide equal opportunity to purchase coal through single window service to all intending Buyers. E - Auction has been introduced to facilitate across the country wide ranging access to book coal on-line for all sections of coal Buyers enabling them to buy coal through a simple, transparent and consumer friendly system of marketing and distribution of coal.
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Terms & Conditions(procedure) With reference to Para VI (4) of the e-Auction Scheme 2007 for Spot e-Auction the detailed terms and conditions are given below : 1. Eligibility: Any Indian Buyer (viz. individual, partnership firm, companies etc.) can participate in eAuction for procurement of coal. 2. Registration: 2.1 Before participation in the e-Auction, a prospective Buyer shall be required to get itself / himself registered with the Service Provider appointed by the CIL / Coal Companies for the purpose, by submitting an application in the prescribed format available on the Website of the respective Service Providers. The application shall be made along with the required documents such as copy of Income Tax return(latest), PAN Number, Sales Tax / Vat Registration Certificate, SSI Registration, Trade License, if applicable, Passport size photograph, etc. as prescribed by the service provider. Registration can be done either online, or at any of the front offices of the service provider. 2.2 After the registration, all-prospective Buyers will have an auto generated Unique User ID & a password based on which they can log in. Details of the registration process with the service provider will be available in their respective websites. 2.3 The service provider shall issue Photo Identity Card to their registered bidders duly authenticating the identity & signature, indicating a Unique Registration Number allotted to them. The Unique registration number of the registered bidders shall be communicated to the Coal Companies by the service provider. 2.4 Only one registration will be done against one PAN number. However, based on more than one independent valid sales tax registration, more than one registration against a PAN Number can be considered. In such cases, the details of valid sales tax registration will be indicated in each Photo Identity Card. 2.5 All Buyers having been registered with the service providers shall also have to furnish non-interest bearing Earnest Money Deposit (EMD) at the rate of Rs.200/- per ton, with the Service Provider. This EMD shall not be specific for a particular Subsidiary Coal Company and shall be available with the Service Provider for participation in the e-Auction across the Subsidiary Coal Companies of CIL, as Long as the required amount of EMD is available in the bidders a/c. with the Service Provider. 3. Notification: 3.1 Coal companies would draw program for conducting at least two e-Auctions per month and notify the same, minimum 7(seven) days in advance, through display on the Companys notice board and putting the same on the Coal Companys websites for wide publicity. The program will be intimated to the Service Providers accordingly for hoisting the same on their websites also.

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3.2 There will be separate auction for dispatches by rail and road mode. The minimum quantity for bidding would be 50 (fifty) tons for a source for Road mode, where as in case of Rail the minimum quantity for bidding would be 1 (one) rake. The rake size shall be as per prevalent Railway Rules. The quantity of coal in a rake shall be as indicated in the notice of E-auction. 3.3 The Buyer should satisfy itself / himself about the Rake fit stations /destinations from the Railways before participation in e-Auction by rail, Non acceptance of the programme, even after the option exercised under extant Railway rules, on account of rake-fit stations / destinations being not accepted by the Railways shall be treated as a failure of the Buyer leading to forfeiture of relatable EMD. 4. Bidding Process 4.1 The registered Bidders shall be required to record their acceptance after login, of the Terms & Conditions of the e-Auction before participation in the actual Bidding Process. 4.2 Before participating in e-Auction, bidders are to satisfy themselves with the quality of coal being offered from a source. 4.3 Prospective Bidders are entitled to Bid for the quantity to the extent of amount of EMD for which is available with the service provider in the bidders account at the time of bidding. 4.4 The Buyers while bidding shall quote their Bid price per ton in Indian Rupee as base coal price on FOR/FOB colliery basis, exclusive of other charges like statutory levies, surface transportation charges, sizing/beneficiation charges, taxes, cess, royalty, SED, & any other charges as will be applicable at the Time of delivery. These charges as well as freight etc. shall be on the Buyers account. 4.5 The bidder has to bid for a price equal to or above the reserve price to secure consideration in the concerned e-Auction. 4.6 The date, time and period of e-Auction as notified in advance including closing time on portal of service provider shall be adhered to but for the event of force majeure. However, the closing time of e-Auction will be automatically extended up to last Bid time, plus 5 minutes, so that opportunity is given to other Bidders for making an improved Bid on that item. 4.7 The Bidder shall offer his Bid price (per ton) in the increment of 10/- (Rupees ten) during the Normal e-Auction period. During the extended period of first two (2) hours, the Bidder shall offer his Bid price in the increment of Rs.20/-. Beyond this extended period of two hours the bid price increment would be Rs. 50/- (Rs.Fifty) only. 4.8 While maintaining the secrecy of Bidders identity, the web site shall register and display on screen the lowest successful Bid price at that point of time. The system will not allow a Bidder to Bid in excess of his entitled quantity as per his EMD. However once a Bidder is out-bided by another (in part or full) the particular Bidder shall become eligible for making an improved Bid. 4.9 Following criteria would be adopted in deciding the successful bidders:26

(a) Precedence will be accorded to the highest bid price in the descending order (H1, H2, H3 and so on) as long as the offered quantity is available for allocation. (b) If two or more buyers bid the same highest price, precedence for allotment will be accorded to the buyer who has placed the bid for the higher quantity. (c) In case two or more buyers bid the same price and the same quantity, precedence will be given to the buyer who has accorded his bid first with reference to time. 5. Post e-Auction process: 5.1 Each successful bidder will be intimated through e-mail / SMS by the Service Provider on the same date after the closure of e-Auction. However, it will be the responsibility of the bidder to personally see and download the result displayed on website, on the same date after close of e-Auction. 5.2 The successful bidders after the e-Auction, will be required to deposit coal value with the concerned coal company, within a period of seven working days, after the date of closing of e-Auction. Seven working days would be reckoned as applicable to the respective Subsidiary Coal companies office where the payment/deposit is required to be made. 5.3 Equivalent amount of EMD of successful bidder corresponding to successful bid quantity, shall be blocked and will be transferred to Coal Company by the service provider along-with the bid sheet in respect of successful bidders. 6. Terms of payment: 6.1 The coal value to be deposited in advance by the successful bidders shall be computed and deposited after making provision for the EMD amount for the successful bid quantity already transferred by the service provider to the subsidiary company. In other words, the coal value to be deposited and EMD amount together, shall be equivalent to the 100 % coal value. 6.2 EMD amount shall not be treated as an adjustment towards the coal value but would stand converted into a Security Deposit for performance of the bidders towards completion of the said transaction. 6.3 The above security deposit (as converted from the EMD amount) would be adjusted as coal value, only after completion of lifting of coal covered under coal value paid, excluding security deposit. However, in the event of default in performance by the bidder, the provision of forfeiture of the Security Deposit (as converted from the EMD) as stipulated, would be applicable.6.4 In case of road supplies, once the coal value is deposited by way of demand draft /pay order, drawn in favour of the concerned coal company, along-with the debit advice issued by the bank, certifying that the DD/pay order has been issued, by debiting the account of the concerned Buyer, Sale/Delivery orders shall be issued within seven days by the coal company after encashment of buyers financial instrument. In case of successful bidders, if the coal value is deposited for less than the allotted Quantity but not below 50% of the allotted quantity or, 50 ton whichever is higher, the coal company shall accept the payment for the said amount and forfeit the EMD for the failed quantity. However if the buyer fails to deposit the coal value for at least 50% of the allotted quantity or 50 tons whichever is higher then the entire EMD of the allotted quantity shall be forfeited.
27

6.5 However, a successful bidder whose allotted quantity is only 50 tons will be allowed to deposit coal value for minimum 90% i.e. 45 tons within the stipulated period of 7 days without which the amount shall not be accepted. In such event they shall be permitted to deposit the balance fractional amount, limited to 10% of the total coal value of 50 tons, within the subsequent period of 3(three)working days. In spite of this, if they fail to deposit full coal value of 50 tons (minimum bid quantity), EMD for entire 50 tons shall be forfeited. 6.6 In case of rail borne supplies, there shall be two options available. While submitting program, the bidder at his option can deposit 100 % BG on the prescribed format from the buyers own account or else may deposit 100% amount through demand draft /pay order, drawn in favour of the concerned coal company, along with the debit advice, issued by the bank certifying that the DD/pay order has been issued by debiting the account of the concerned Buyer. 6.7 In case of Buyers who have booked their rail programme through BG, a notice for deposition of coal value by way of DD/Pay order, will be displayed on the notice board of the coal company, at least three working days in advance before the expected date of offer to the Railways for allotment. The Buyer will be accordingly required to deposit DD/Pay Order along with the debit advice to the tune of BG involved in the programme, within 48 hours of such notice. In the event of non-deposition of 100% coal value by the Bidder in terms of Clause-6.7 above, the consent given against rake programme will be withdrawn by the coal company and EMD as per e-Auction scheme will be forfeited. 6.8 The Buyers shall also have the option of e-Payment once the system in the Coal companies is suitably developed & the same is notified on the websites accordingly. 7. Procedure of Coal Delivery By Road: 7.1 Coal company shall issue Sale / Delivery Orders to the successful bidders in terms of Clause 6.4 after realisation of payment. The Buyer has to submit the option before the issue of the Sale / Delivery Order for movement of the coal within state or outside state and the Sale / Delivery Order would indicate the Same accordingly. However, the challan issued by the Coal Company shall indicate the destination. 7.2 The validity period to complete lifting of coal by road shall be 45 days from the date of issue of Sale/Delivery Order. No extension of validity will be allowed in any case. By Rail: 7.3 The seniority of buyers in case of rail borne supplies shall be guided by the seniority list as provided by the service provider based on buyers bids. 7.4 The quantity allotted against each rake is indicative quantity only and delivery shall be made on the basis of actual weighment by the Seller at the loading end.

28

7.5 The validity period for seeking allotment of rake in case of rail supplies shall be 45 days from the date of issue of consent by the coal company. Once the rake is allotted it shall remain valid for supply of coal as per prevailing Railway Rules. 7.6 Although loading will be the responsibility of the coal company, but to avoid any complaint regarding over-loading, under loading and quality, the Buyer himself or his authorized representative may supervise loading at the loading point. The authorized representative must carry valid authority letter along with photocopy of Identity Card issued by Service Provider. 7.7 Overloading & Under loading: 1) Any penal freight for overloading charged by the Railways for any consignment shall be payable by the Purchaser. However, if overloading is detected from any particular colliery, consistently during three (3) continuous months, on due intimation from the Purchaser to this effect, the Seller undertakes to take remedial measures. 2) Any idle freight for under-loading below the stenciled carrying capacity, as shown on the wagon, for Grade A, Grade B, Steel Grade I, Steel Grade II, Washery Grade I, Washery Grade II, Semi-coking Grade I, Semicoking Grade II and washed Coal; and below the stenciled carrying capacity, as shown on the wagon, plus two (2) tonnes for all other Grades of Coal shall be payable by the Seller. 3) Idle freight resulting from under loading of wagon, as per point no.2,shall be adjusted in the bills. Idle freight shall be reckoned as: (i) the difference between the freight charges applicable for the stenciled carrying capacity, as shown on the wagon, less the freight payable as per actual recorded weight of Coal loaded in the wagon for Grade A, Grade B, Steel Grade I, Steel Grade II, Washery Grade I,Washery Grade II, Semicoking Grade I, Semi-coking Grade II and washed Coal; Or (ii) the difference between the freight charges applicable for the stenciled carrying capacity, as shown on the wagon, plus two (2) tones less the freight payable as per actual recorded weight of Coal loaded in the wagon for all other Grades of Coal. 7.8 The weighment at the loading end shall be final and binding for all commercial purposes. 8. Refund of EMD for Unsuccessful bidders:In case of unsuccessful bidders, EMD shall be refunded by the Service Provider after the auction is over, on the bidders request. However, if no such request is received the Service Provider will retain the EMD for participation in e-Auction in future. 9. Forfeiture of EMD: The EMD submitted by the successful Bidders will be liable for forfeiture in the following cases: 9.1 If after completion of e-Auction, a successful bidder fails to make payment for the coal value including all other charges within the stipulated time, the proportionate EMD

29

equivalent to the failed quantity shall be forfeited subject to the provisions at Clause 6.4 and/or Clause 6.5 of this document, and/or, 9.2 If the successful bidders does not lift the booked quantity within the stipulated validity period, the proportionate Security Deposit @ Rs. 200/- per Ton (as converted from the EMD amount) for the uplifted quantity would be forfeited. Such forfeiture shall be made only if the balance Uplifted Quantity is Equal or more than a Truck Load i.e.9 or 10 tons as applicable. Such forfeiture, however, would not take place if the coal company has failed to offer full or part of the successful bid quantity within the validity period. In such cases again, no forfeiture would take place if the balance quantity is less than a truck load/rake load. 9.3 If the Buyer cancels the order/Rake after booking, the EMD @ Rs.200/ -per ton shall be forfeited for the rake cancelled. 10. Refund of Coal value: The balance coal value of the uplifted quantity after the expiry of the validity period for supply of coal and completion of required commercial formalities shall be refunded subject to forfeiture of EMD if required, in terms of the forfeiture clause as above. 11. General Terms & Conditions: 11.1 The coal procured under e-Auction is for use within the country and Not for Export. 11.2 All terms and conditions of Scheme are subject to force majeure conditions as applicable. 11.3 Bidders must always ensure to keep their email address valid. In any case Buyers can not be absolved from fulfilling the responsibility of compliance of any of the terms and conditions herein including payment terms due to non-receipt of emails from the Service Provider. 11.4 Bidders must be extremely careful to avoid any error in bidding (whether typographical or otherwise) and they are fully responsible to check and rectify their bid before submitting their Bid into the live e-Auction floor by clicking the Bid button. During the auction if the incremental bid price is more than 50% of the immediate preceding bid price, then the system will seek a re-confirmation from the Bidder before the bid is registered. 11.5 There is no provision for bidding in decimals. The Bidder shall be solely responsible for all consequences arising out of the bid submitted by him(including any wrongful bidding by him) and no complaint /representation will be entertained by the Service Provider/Coal Company in this regard. 11.6 The decision of the Director-In-Charge of Marketing of CIL / Coal Company in matters related to this e-Auction shall be final and binding on the bidders / Buyers. 11.7 Quantity mentioned in notice are only indicative and may undergo a change depending on factors like actual production of coal, bottlenecks in coal transportation etc.11.8 There will not be any joint/ third party sampling facility extended to any buyer. Refusal on account of
30

non-suitability and /or sub-standard quality for the allotted quantity of coal shall not be acceptable. 11.9 Coal Company / Service Provider reserve the right to cancel the sale of coal under this eAuction from any source / location in part or whole at any stage at its sole discretion without assigning any reason thereof and no party shall have any right whatsoever to raise any claim in that regard on that count. 11.10 CIL/Coal Company reserves their rights to amend/modify and revise the terms and conditions contained herein in full or in part at any point of time and no party shall have any right whatsoever to raise any claim in that regard on that count. 11.11 Sale under each e-Auction shall be an individual, independent, unique and complete transaction. 11.12 In the event of any dispute, Bidder / Buyer is necessarily required to represent in writing to the General Manager (Sales) of the concerned coal company, who would deal with the same in a period of one month from such representation. Thereafter, if required the matter be determined by the Director-In-Charge of Marketing of the concerned coal company. Any interpretation of any clause of this will be subject to clarification by CIL, which will be deemed as firm and final. All disputes arising out of this scheme or in relation thereto in any form what so ever shall be dealt exclusively by way of arbitration in terms of the Arbitration and Conciliation Act, 1996. The arbitration shall be conducted at Calcutta at a place to be notified by CIL. The arbitrator shall be appointed by the Chairman and Managing Director, CIL upon written request in this behalf. The award rendered by the Arbitrator shall be final and binding on the parties. (The place of arbitration &nomination of arbitrator be varied appropriately in view of the Coal Company involved)

31

Forward e-auction
OFFER OF FORWARD e AUCTION OF COKING COAL FOR THE PERIOD JULY10 TO JUNE 11 THROUGH MSTC PORTAL
OFFER QUANTITY FOR FORWARD E_AUCTION FOR JULY'10 TO JUNE'11

SL.

RESERVE JULY'10 OCT'10 PRICE GRADE SIZE TO TO SEPT'10 DEC'10 OFFER BY ROAD ( Quantity in Metric Tonnes) SOURCE / SIDING Madhuband Madhuband Phularitand Block-II K.Choitudih Gaslitand Kankanee Mudidih Kusunda Bararee Bararee Bagdigi Lodna Lodna STL 1 STL II W3 W4 W 3 STL II STL II STL II W 4 STL II W2 W3 W3 W2 ROM ROM ROM ROM ROM ROM ROM ROM ROM ROM ROM ROM ROM ROM 7255 6157 3169 2971 3169 6157 6157 6157 2971 6157 4069 3169 3169 4069 2100 4750 2500 21750 2500 27000 20500 16250 44250 7000 4250 5500 6300 2000 166650 2100 4750 2500 21750 2500 27000 20500 16250 44250 7000 4250 5500 6300 2000 166650

TOTAL QUAN JAN'11 APRIL'11 TITY TO TO JUN'11 MAR'11

1 2 3 4 5 6 7 8 9 10 11 12 13 14

4200 4750 21750 2500 27000 20500 16250 44250 7000 4250 5500 6300 4750 21750 2000 27000 20500 16250 44250 6500 4250 5500 6300 19000 5000 87000 9500 108000 82000 65000 177000 27500 17000 22000 25200 4000 160050 159050 652400

TOTAL ROAD OFFER BY RAIL

Gaslitand/SL Govindpur STL II ROM STL II 2 Kankanee / Jogta Bhowrah(N) /BCB4&5 ROM 6157 6157

48000

48000

48000

48000 192000

28000

28000

28000

28000 112000

8000 STL II ROM 6157 84000 250650

8000 84000 250650

8000 84000 244050

8000 32000 84000 243050 336000 988400

BCCL RAIL BCCL TOTAL

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 Traffic Traffic is converted into two categories i.e. railway and another one is roadway. Both are used for delivery of coal, mainly traffic is related to the railways data maintaining of distribution of coal to the various consumers. o Railway (using of rakes)-by railway receipt o Roadway (using of trucks)-by challan

By Railway:
y

The seniority of buyers in case of rail borne supplies shall be guided by the seniority list as provided by the service provider based on buyers bids. The quantity allotted against each rake is indicative quantity only and delivery shall be made on the basis of actual weighment by the Seller at the loading end. The validity period for seeking allotment of rake in case of rail supplies shall be 45 days from the date of issue of consent by the coal company. Once the rake is allotted it shall remain valid for supply of coal as per prevailing Railway Rules. Although loading will be the responsibility of the coal company, but to avoid any complaint regarding over-loading, under loading and quality, the Buyer himself or his authorized representative may supervise loading at the loading point. The authorized representative must carry valid authority letter along with photocopy of Identity Card issued by Service Provider

By Roadway:
y

Coal company shall issue Sale / Delivery Orders to the successful bidders in terms of Clause 6.4 after realisation of payment. The Buyer has to submit the option before the issue of the Sale / Delivery Order for movement of the coal within state or outside state and the Sale / Delivery Order would indicate the Same accordingly. However, the challan issued by the Coal Company shall indicate the destination. The validity period to complete lifting of coal by road shall be 45 days from the date of issue of Sale/Delivery Order. No extension of validity will be allowed in any case.

Road sales Road sales is that department maintain the schedule of e-auction. 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 available institutional mechanisms for reasons like the seasonality of coal requirement, limited requirement of coal not warranting long-term linkage etc. In the long run, it is expected that e-auction may help in creating spot as well as future market of coal in the country.
33

Realisation: Realisation department is mainly related to consumer wise realization vis--vis bill forwarding to different credit parties like power houses, Steel plant & Fertilizers plants.All yhe bill which is raised at Area level is send to realization section of koyla bhawan, which is then processed & Forwarded to the consumers for payment. it will be more clear with the billing information.

Linkages Standing Linkage Committee (Long Term) for Power, Cement and Sponge Iron consider requirement of coal of consumers at the planning stage and links the requirement in the longterm perspective from a rational source after examining factors like quantity and quality required, time frame, location of the consuming plants, transport logistics, development plan for the coal mine etc. During the year 2008-09, the Committee has issued/authorized Letter of Assurance (LOA) to a large number of consumers of the then Core Sector namely Power, Cement and Steel (Sponge Iron Units) as detailed below:Name of the Sector Power utilities IPPs Cement CPPs Total Number of applications approved 8 35 28 71 Capacity approved 4460 MW 24915 MW 888.5 MW 30,263.5 MW

NCDP: New coal Distribution policy In supersession of existing coal distribution policy for core and non core sector and other instructions issued in this regard from time to time, the government is pleased to approve the NCDP. The new policy is policy is as follows:1. Classification of consumers: the existing classification of consumers into core & non core has reviewed and it has now been reviewed and it has now been decided to dispense with the same.instead,each sector/consumers would be treated on merit keeping in view,inter-alia,the regulatory provisions applicable thereto and other relevant. 2. Distribution and pricing of coal to different consumers/sector(s):2.1requirement of defence sector and railways will be met in full at notified price
34

,as present. 2.2 power utilities including Independent Power Producers (IPPs)/Captive Power Plants (CPPs) and Fertilizer Sector. 100% of quantity as per normative requirement of the consumers would be considered for supply of coal, through Fuel Supply Agreement (FSA).and power plants coal requirements has already accepted by Ministry of coal and linkage/Letter of Assurance(LOA) approved as well as future commitments. 2.3 other consumers :75% of quantity as per normative requirement of the consumers/actual users would be considers for supply of coal through FSA and rest 25% by e-auction. 2.4 coking coal to integrated steel plants:supply of coal to steel plants would be based on Fuel Supply Agreements (FSAs).the price of coal would be on the basis of import parity pricing with suitable adjustment for quantity. This system is already in vogue. 3. Consumer in small & medium sector:The state governments are requested to work out genuine requirement of such units. In small and medium sector like smokeless fuel, cokes etc.the state government genuine consumption & monitor use of coal. The present capacity is also enhanced to 4200 tons per annum.whose requirement is less than 4200 tons per annum and otherwise not having any access to purchases of coal or conclude FSA for coal companies. The unmarked quantity would be distributed by state govt. agencies e.g. National Co-operative Consumer Federation (NCCF) National Small Industries Corporation (NSIC).the agency would be entitled to charge actual freight and up to 5% margin as service charge over and above the basic price charged by Coal Company from their consumer. 1.2 the quantity to be allocated to this sector may be reviewed on the basis of their performance in the beginning of every year, allocation of this quantity amongst the states would be done on the basis of their consumption pattern in the past. 4. Replacement of linkage system by fuel supply Agreement (FSAs): The linkage system will be replaced with a more transparent bilateral commercial arrangement of enforceable FSAs.All the existing valid linked consumers whose linkage/MPQ during the year 2006-2007 was 4200 tonnes or more would have to enter into FSAswith coal companies not after than six months from a date to be notified by CIL. The other valid linked consumers will have the option to opt out of FSA regime or enter into FSA within six months, On opting cut they may access their coal requirement through various channels like e-auction, distribution network of state nominated agencies etc.Faliure to enter into FSA will result in discontinuation of supplies at fixed prices.All existing FSAs as prevailing on the date of introduction of this policy,will continue.However,they would need to be modified in view of the new provisions.

35

5.Policy for New Consumers:The Letter of Assurance (LOA) to be issued now pursuant to the new policy will have a validity of 24 months for consumers/applicants of power utilities.CPPs & IPPs and 12 months for other consumers instead of 30 months as earlier. The allotted of LOA would be required to fulfill certains stipulated conditions and meet the milestones with the period and their upon approach coal companies for entering into FSA Such FSA would be completed within three months.Further with a view to ensure that only serious consumer approach for LOA they would be required to furnish an Earnest Money Deposit(EMD).EMD can be in the form of bank guarantee and would stand discharged once FSA is conclude with the stipulated period however on failure the EMD will forfeited. 5.2 For new commitments including short term tapering commitment to consumer having captive coal block, power utilities, CPPs, IPPs Fertilizer etc would be issued and enforceable LOA for apply of coal and their after they would be entitled to enter to FSA with the stipulated time subject to fulfillment of certain condition to be stipulated therein.CIL will issue LOA after approval of applications by the standing Linkage committee(Long-term)However for other sectors the task of issuing letter of assurance will be the responsibility of CIL. 6. Letter of Assurance for New Consumers 6.1 New consumers for central power utilities ,CPPs independent power producers fertilizers cement and sponge iron units may be issued LOA, based on prevailing norms and recommendation of administrative ministry which may inter Alfa have regard to LOA /linkage already granted to the consumer of specific sector. Existing capacity requirement for capacity adding during a plan period etc. 6.2 all other consumer may be issued LOA by CIL based on the prevailing norms and on the recommendations of the administrative ministry. If required the purpose of processing /certification of the coal requirement of the individuals consumers if there is no prevailing norms of such category of consumer/sector. 6.3LOA will be issued by the CIL to the applicant consumers consequent upon payment of EMD to the coal company the amount of EMD could be initially kept 5% of the value of annual coal requirement. 6.4 LOA will be valid for a period of 12/24 months as applicable, during which the applicant consumer will be required to achieve the milestones pertaining to his project/plant as stipulated in the LOA, failing which LOA will stand terminated automatically and EMD would be forfeited. 7. FSAs with new consumers: 7.1 on successfully achieving the milestones stipulated in LOA coal companies would execute FSA with the applicant consumer covering commercial arrangement for supply of
36

coal. FSAs would be, inter-alia, based on Take or Pay principle. 7.2 The FSAs would cover 100% of normative coal requirements of the power utilities, including independent power producers (IPPs) and captive power plants(CPPs),fertilizers units and 75% of normative coal requirement of other consumers. 7.3 As and when FSA come into existence, both parties viz .coal companies and consumers would Endeavour to enter into Fuel Supply and Transport Agreement(FSTA)which would be a tripartite agreement involving the coal supplier, the coal consumer and the logistic provider i.e. railways. The FSTA may firstly be made applicable to major consumers like power, cement and steel sector and could be extended to other consumers in a phased manner. Role of Standing Linkage Committee The existing SLC (LT) will continue to recommend issuing of LOA in respect of utilities including CPPs & IPPs, cement and sponge iron including steel, as is being done at present. It may also perform other functions as per its terms of reference for coal sector as a whole. The issuance of LOA to consumers of other sectors will be directly deal with CIL on the basis of recommendation of nodal ministry. 9 Discipline and economy in coal use Coal is no longer an essential commodity but it is still considered a scarce fuel and hence it must be used efficiently and economically. The consumers getting coal through FSA would be expected to use it efficiently so as not to waste this scarce resource and hence norms and efficiency compliance should be carried out diligently by the concerned designated authorities/agencies. This would also require that coal supplied should not be misused or diverted by FSA holders to others. The existing norms wherever being made applicable for deciding linkage quantity etc., would be reviewed in consultation with the nodal ministry concerned, and revised norms would be made applicable for working out the satisfaction level, wherever applicable. 10 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 available institutional mechanisms for reasons like the seasonality of coal requirement, limited requirement of coal not warranting long-term linkage etc. In the long run, it is expected that e-auction may help in creating spot as well as future market of coal in the country. Thus a fresh scheme of E-auction will be introduced subject to, inter-alia following conditions:Any buyer will be entitled to buy coal under e-auction.:y

There shall not be any floor price in e-auction, However, coal companies may be allowed to fix an undisclosed reserve price not below the notified price.
37

y y

Programme of e-auction should be announced well in advance and be given wide publicity to all consumers who intend to participate. At the beginning of the financial year CIL shall declare a programme on sale of coal through e-auction indicating the quantity and quality of coal to be made available through auction during all the four quariers from different coal companies/coalfields. In order to address the concerns of such industrial consumers who wish to have an assured supply over a long period, say one year, under e-auction so as to plan their annual production etc, CIL will earmark affixed quantity which will be provided to highest bidder/bidders as per bidders requirement over the period of the bid. Based upon above guidelines and modalities a revised e auction scheme would be introduced by CIL within one month around 10% of estimated annual production of CIL would initially be offered under e-auction and the quantity to be offered under e-auction would be reviewed from time to time by ministry of coal.

11.Transitional provisions and implementation schedule The new distribution policy envisages implementation of revised distribution policy in which there in which there will be departure from the existing policy of distribution based on inter-alia norms FSAs price, distribution mechanism, administrative allocation etc. As these modalities will have to be tailor made accordingly to the new distribution policy, transitional provisions have been made for implementing new coal distribution policy and to avoid any disruption in coal distribution to various categories of consumers as under.

38

Para number Para 2

Implementation schedule Up to 6 month

Para 3

Up to 6 month

Para 4

6 month

Para 5 & 6

a)2 month

b)1 year

Transitional provisions Distribution as per existing FSA/SLC(ST).or non core linked consumers the present system of offer by CIL This existing system of allocation of coal to state nominated agencies and NCCF to continue. However, recommendation regarding enhancement of cap to 4200tons per annum will be given immediate effect. Allocation in terms of existing FSA/SLC(ST).for non core linked consumers the present system of offer by CIL. For power utilities /IPPS LOA to be recommended by SLC(LT)subject to deposit of applicable EMD and modified LOA containing stipulated terms and conditions.for other categories similar conditional LOA can be issued by CIL if required. Existing system of meeting the FSA quantity would continue. e-booking to be extended in the interim.

Para 7.1 Para 10

2 month 1 month

Verification of erst while non core sector consumers CIL would undertake verification of such consumers, in a time bound manner either directly or through an agency, so as to check the veracity of their claim of being bonafide consumers of coal & there after act accordingly. In respect of those consumer who are not found to be bonafide.coal companies can cancel their allocation.

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Effect of/ Relationship of Marketing, sales & distribution of coal of BCCL with other elements of your specialization. The Marketing sales and distribution of coal of BCCL is directly related to marketing specialization. It has the link between its different phases of sales and distribution of coal.

Comparative Analysis  At present ECL has 105 no. of operating mines out of which 88 are underground mines, 17 are opencast mines.  Total proved reserve in the state of West Bengal is 11.423 billion ton and 4.103 billion tone is in the State of Jharkhand.  ECL has earned highest gain over notified price (Rs. 188 crore) from e-auction during the year 2008-09, but the gain over notified price in 2009-10 was only 91.60. Overseas information Coal in Australia It is used to generate electricity and is exported. 75% of the coal mined in Australia is exported, mostly to eastern Asia. In 2000/01, 258.5 million tonnes of coal was mined, and 193.6 million tonnes exported Two forms of coal are mined in Australia, depending on the region: high quality black coal and lower quality brown coal.
y

Black coal is found in Queensland and New South Wales, and is used for both domestic power generation and for export overseas. It is generally mined underground before being transported by rail to power stations, or export shipping terminals. Black coal was also once exported to other Australian states for power generation and industrial boilers. Brown coal is found in Victoria and South Australia, and is of lower quality due a higher ash and water content. As a result Victoria adopted German power station and briquette technology in the 1920s to utilize the brown coal reserves of the Latrobe Valley. Today there are three open cut brown coal mines in Victoria used for baseload power generation

Production in CANADA
y y y y y

According to the 2010 BP Statistical Energy Survey, Canada had end 2009 coal reserves of 6578 million tons, 0.79% of the world total. Canada had 2009 coal production of 62.93 million tons, 0.96% of the world total. Canada had 2009 coal consumption of 26.47 million tons oil equivalent, 0.8% of the world total. The Canadian coal industry plays an important role in the Canadian economy, both as a mining industry and as an energy provider Canada is a major coal producer and consumer, with, according to the 2008 BP Statistical Energy Survey, end 2007 coal reserves of 6578 million tons.
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Coal power in China The People's Republic of China is the largest consumer of coal in the world,
y y y

and is about to become the largest user of coal-derived electricity, generating 1.95 trillion kilowatt-hours per year, or 68.7% of its electricity from coal as of 2006 (compared to 1.99 trillion kilowatt-hours per year, or 49% for the US) Hydroelectric power supplied another 20.7% of China's electricity needs in 2006. With approximately 13 percent of the world's proven reserves, China has enough coal to sustain its economic growth for a century or more even though demand is currently outpacing production.

NEWZELAND COAL The Coal Association of New Zealand represents the interests of over 95% of New Zealand's coal producers and industry users. The Association liaises with the Government and the community, and promotes government and industry research investment to strengthen the industry's competitiveness and environmental acceptability

Analysis of Information

Analysis of Factors responsible for losses

 Huge losses since Inception  NCWA- VI without Financial Support  Under Investment in HEMM  Average age of eqpt goes beyond rated life  Decline in Capital Utilization to 61%  Decline in production Further losses Staggering Liabilities

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SWOT analysis:STRENGTHy y

Major producer of coking coal Less expensive in open cast production in compare to other

WEAKNESSES
y

y y y y

Coal has been viewed as an industry that is faced with the risk of being abandoned due to the alarming issues of climate change, carbon emission concerns and energy sustainability. This has been prompting increased usage of alternative sources of energy generation, like wind, solar and nuclear power. While the production of coal plants has slowed to curb emissions, the coal industry should see the profits continue to roll in. Solar and wind power are expensive, and nuclear power has issues regarding its acceptance as a major power source. The cap-and-trade system may pose long-term problems for the coal industry as it would increase the cost of coal, thereby decreasing its competitiveness as an energy source (and decreasing demand for it) and would force businesses to use less reliable and more expensive forms of energy.

OPPURTUNITY
y y

Opportunity of build up nation through employing candidates, Towards using new techniques for production of coal.

THREATS
y

Political constraints appear to be delaying, if not altogether eliminating, the threat of major environmental regulatory overhaul, a net positive for the coal industry.

Issue and challenges faced by CIL to (B.C.C.L) Chairman, CIL advised CMD, BCCL to explore the scope of enhancing coal production level beyond the set target of 28 MT to 28.3 MT in the year. CMD, BCCL agreed to explore the possibility and make all out efforts in this regard. He however requested help from the Ministry regarding increase in railway rakes/wagon and setting up of project office of Chinese Company ZMJ. In this connection, it was decided that Ministry of Coal shall (i) take up the matter with Ministry of Railway for enhancing the supply of wagons,

(ii) Take up the matter with Ministry of Home Affairs for obtaining the clearance from RBI for opening the project office of ZMJ (Chinese Company) in India.

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Conclusion: BCCL is one of the best companies under CIL and only coking coal in India which is found in Dhanbad. It is helpful in economic development of country, and builds the relation with different sectors which have the demand for the coal. It fulfill the need of coal for the different sector of production (power, fertilizer, defence, chemicals).

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Recommendations: The BCCL should always keep in mind about:1. 2. 3. 4. 5. 6. 7. y y Keep attention towards Marketing Use quality coal Increasing price of coal Changing the method of production Using good technology and machinery Link with market with directly to economy Changing the quality of coal Sized coal Wayment 100%

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