Companies & Sectors
Coal India at crossroads—Whether to buy foreign assets or develop domestic mines

Coal India has something like $6 billion in cash reserves that can be used to obtain good quality assets abroad and be gainfully spent within the country. It should also avoid venturing into unknown foreign assets and instead outsource domestic mines

India needs annually about 600 million tonnes of thermal coal of which 20% (about 120 million tonnes) is imported due to shortfall in indigenous production, which is around 492 million tonnes.


Coal India (CIL) was set up in 1976 as a national monopoly by taking over all the private coal mines in the country, and Coal India is the world's largest coal company. At present, imported coal comes from Australia, Indonesia and Mozambique. Due to slackening of demand, particularly from China, international coal prices have come down from$92 in 2011-12 to $72 in 2012-13 per tonne.


It may be recalled that in order to ensure supplies of coal, a few years ago, coal blocks were allotted to private enterprises, in a non-transparent manner, because it was felt that they would ‘deliver’ the goods by developing the mines in a more efficient and profit oriented manner. However, when they failed to do so, these were repossessed by the government and have now been allotted directly to power generating units. It now remains to be seen how seriously these units take this challenge and start mining operations, so that their dependence on Coal India is reduced considerably.


According to data available from the Central Electricity Authority (CEA), the thermal coal based power plants only utilized 61.5% of their capacity due to non-supply of coal and 11.5% capacity due to non-supply of gas. In other words, these power plants were working on 73% of their installed capacity.


Now, what is the major problem that has plagued the Coal India to meet the national demand of coal?  There are a number of problems, such as the issues of obtaining various clearances from state governments, ministry of environment and forests, hassles in land acquisitions, rehabilitation of those whose lands have been acquired, compensation claims, piling up of coal at mine pitheads, inadequate supply of rakes and related transport bottlenecks. On the top of these, even the dedicated rail corridors are not fully operational due to slow speed of work!


These apart, there have been delays in FSAs between CIL and various consumers of coal.  The major dispute between NTPC-CIL has now been resolved, though the actual terms of the settlement have not been made public, including the issue of supply of poor quality lower caloric value coal and the inspection procedures to ensure these does not come in the way of future supplies.


To overcome the supply problem of good quality thermal coal, CIL has also been looking at overseas assets to buy.  These may look rosy on the outside but past experience of some leading corporate giants like the Rio Tinto group has not been satisfactory. In fact, it has been reported that it had to write down and accept a substantial loss in Mozambique because, after it took over an asset, it found that the recoverable coal was much lower than the original estimate!


CIL’s own experience in Mozambique, for example, where it has made a small beginning has not been satisfactory. It has obtained a licence to explore coal mining rights in Limpopo region, but after the initial investment of some Rs15 crore, it now needs to establish a railway line to link to the port. Unless other users are able to share the cost of such an infrastructure development, it would be an expensive proposition for it to take on its own. This will increase the cost.


What then are the best alternatives under these difficult circumstances? CIL would be better off in getting into long-term supplies with reputed overseas suppliers in Australia and Indonesia, for a start, rather than venture into the unknown of owning assets and getting into equity participation, unless the joint venture partner has a long history of successful mining operation in that country.


Second is to concentrate on local development of indigenous mines. Though it may be necessary to follow up with the state governments and the MOEF for pending clearances, many of which are several years old, and simultaneous plan infrastructure development, so that time is not lost.


There are too many such cases “in process” and CIL has to have a crack team, if it does not have one already in operation, whose main job is to tackle such matters. Leaving such matters for work to progress in a routine manner has only meant delays as we see them today. These have to be tackled on a war-footing.


Take the three main units of coal production for CIL on its web-site. For example, in the case of Eastern Coalfields, they are awaiting for clearances, which are “pending for more than five years now”.  The details are not given on the website.  So, this writer took up the issue with Rakesh Sinha, chairman and managing director of this unit, seeking information on the matter. There has been no response; in fact, not even an acknowledgement from the CMD’s office. A reminder has also not evinced any response!


One has to presume that either the CMD does not care for such letters of serious interest or considers it below his status to respond. Or, he may have no authority to respond or give out such information, and may have referred the matter to Narsing Rao, CMD of Coal India for clearance?


How does anyone know if “pending clearance” is not due to similar bureaucratic bungling? 


The fact is that CIL is flushed with funds and it has something like $6 billion in cash reserves that it can use to obtain not only good quality assets abroad, but maybe gainfully spent within the country. Venturing into the unknown in a foreign country is best avoided by sourcing the mines within the country. What CIL can do is invite some leading coal miners in well established pioneers like UK and USA in this field, which will bring in long-term benefits to the people here in our own country, where the estimated reserves are substantial. 


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Dr Anantha K Ramdas

4 years ago

The novice would like the decisionmaker to read the article again before pointifying.

CIL has the options open - but it is our interest to develop our national resources, take assistance from miners abroad, acquire assets where possible.
All these points are covered by
the novice.

Dr Anantha K Ramdas

4 years ago

The novice would like the decisionmaker to read the article again before pointifying.

CIL has the options open - but it is our interest to develop our national resources, take assistance from miners abroad, acquire assets where possible.
All these points are covered by
the novice.


4 years ago

The article is like a novice work, the management of companies need to make such decisions, you cannot put all your eggs in one basket. With 6 billion you need to judiciously use the money both for acquiring assets abroad and developing indigeneous sources, company should not only sit on that money. We do have to also look at the example of China, which develops its own natural resources as well as consolidates supply from abroad.

RTI Judgement Series: Five officers of MCD issued show-cause for giving false information

Five officers of MCD stated there was nothing unauthorized or illegal about the temple. This was contradictory to replies given by two PIOs, which said the temple was unauthorized construction on public land. This is the 133rd in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing an appeal, issued a show-cause notice to five deemed Public Information Officers (PIOs) of the Municipal Corporation of Delhi (MCD), including an assistant commissioner, after finding them guilty of knowingly supplying false information.


While giving this judgement on 10 June 2009, Shailesh Gandhi, the then Central Information Commissioner said, “Two PIOs earlier stated that the temple was an encroachment. However, five officers after an inspection appear to have colluded in stating that there was nothing unauthorized or illegal. This appears to be the corrupt collusion which must be very strictly dealt with.”


New Delhi resident Dilip Kumar (Chavanni), on 1 April 2008, sought information about illegal encroachment by Manushi Sangthan from the Public Information Officer (PIO) of Office of the Superintending Engineer-I at MCD. He has also asked for certified copy of the record and name and designation of the officer who has acted upon the complaint of illegal encroachment by Manushi Sangathan by making toilets and a temple. Here is the information he sought under the Right to Information (RTI) Act and the reply given by the PIO...


1. Give the details of encroachments from Sewa Nagar Railway station to Hanuman Mandir, which has been recorded but has not been removed.  

PIO's Reply: An encroachment has been done by a temple in a row of road from Sewa Nagar Railway Crossing to Hanuman Mandir.


2. Is there any details in the record of year 2004, 2005, 2006 and 2007?

PIO's Reply: As above.


3. Is the model of Narayani Devi Temple in your record? 

PIO's Reply: As above.


4. Give the certified copy of all the orders and action taken by MCD to remove this illegal encroachment.   

PIO's Reply: In this regard a letter has been sent to Manushi Sangthan to take necessary action for removing this illegal construction.


5. Is the office of Manushi Sangthan, which has been built along with Mahbub Stall, in your record?       

PIO's Reply: No such information is available in this office.


6. Give the certified copy of order to remove this office by MCD.        

PIO's Reply: As above.


7. Is the toilet, made by Manushi Sangthan in your record of illegal encroachment? Give the copy of the record for removing this by MCD.    

PIO's Reply: This is related to Licensing Department, Central Zone.


8. Give the name of the department and officer who are responsible for searching and removing of encroachment. 

PIO's Reply: Regional Sub./Assistant Engineer (Building) and Licensing Inspector are responsible for removing encroachment.


9. Give the name and the designation of those officers of MCD who were responsible for removing illegal encroachment from the site of Sewa Nagar Pilot Project from 2005 to till date.    

PIO's Reply: Regional Sub./Assistant Engineer (Building) and Licensing Inspector are responsible for removing encroachment.


Since the PIO did not furnish information regarding action taken by MCD against the encroachment by Manushi Sangthan, the appellant Dilip Kumar filed his first appeal.


In his order, the First Appellate Authority (FAA) said, “The related PIO is directed to give information to the appellant about necessary action after inspection of the related site within 30 days from issuing of this order.”


After not receiving proper information, Dilip Kumar approached the CIC with his second appeal.


During the hearing, Mr Gandhi, the then CIC, noted that initially the PIO had stated in his reply  under query no1 that the temple was an encroachment. Following directions from the FAA, an inspection was done and the information was sent to Dilip Kumar, the appellant on 19 January 2009. This was signed by five officials, licensing inspector Shishupal, junior engineer Ravi Kumar, assistant engineer NS Meena, executive engineer AK Singh and assistant commissioner RK Parashar. This information stated that the temple (Manushi Shagthan's office) and toilet were part of the Manushi Project and were approved.


The appellant, Dilip Kumar, produced a copy of the letter given to him under RTI dated 5 July 2007 signed by the zonal engineer (W-III) which stated that the temple was an unauthorized construction on public land directing that it should be removed.


Mr Gandhi said, “It is evident that contradictory statements have been made regarding certain structures. On 5 July 2007, the temple was stated to be unauthorized, on 1 May 2008 the PIO also stated that the temple was unauthorized and on 19 January 2009 five officers, after an inspection, appear to have colluded in stating that there was nothing unauthorized or illegal.”


“Unless there are any developments, which have not been shown before the Commission, this appears to be the corrupt collusion which must be very strictly dealt with. The Commission charges these five officers the collusion in giving false information to the appellant,” the CIC said.


Mr Gandhi, in his order, said, “There are other implications and the additional commissioner (engineering) is directed to enquire into this and send a report to the appellant and the Commission before 30 June 2009. This report will also state the action taken against responsible officers, if wrong doing is discovered.”


While allowing the appeal, the CIC directed the PIO to give a copy of the lay out plan of the road with the details of the project structures to the appellant before 20 June 2009.


From the facts, the Commission felt it was apparent that the five deemed PIOs guilty of knowingly furnishing false information, which attracts penal provisions of Section 20 (1) of the RTI Act. Mr Gandhi then issued a show-cause notice to all the five officers and directed them to give their reasons to the Commission to show cause why penalty should not be levied on them. 




Decision No. CIC/SG/A/2009/000906/3636

Appeal No. CIC/SG/A/2009/000906


Appellant                                            : Dilip Kumar (Chavanni)

                                                                 New Delhi-3


Respondent                                    : Naveen Verma

                                                            Public Information Officer

                                                            Municipal Corporation Of Delhi,

                                                            Office of the Suptd. Engineer-I,

                                                            Central Zone, Lajpat Nagar,

                                                            New Delhi-110024


RBI fines 22 banks for violating KYC/anti-money laundering norms

RBI has also issued cautionary letters to Citibank, Standard Chartered Bank, Barclays Bank, BNP Paribas, Royal Bank of Scotland, Bank of Tokyo Mitsubishi and State Bank of Patiala

The Reserve Bank of India (RBI) on Monday imposed fines totalling Rs49.5 crore on 22 private and public sector banks including SBI, PNB and Yes Bank for violating KYC/anti-money laundering norms.


It also gave cautionary letters to seven including Citibank and StanChart following an exposé made by an online portal.


“After considering the facts of each case... Reserve Bank came to conclusion that some of the violations were substantiated and warranted imposition of monetary penalty...” the central bank said in a statement.


A penalty of Rs3 crore each has been imposed on State Bank of India (SBI), Bank of India, Canara Bank, Bank of Baroda, Central Bank of India, Indian Overseas Bank and Federal Bank.


United Bank of India, Lakshmi Vilas Bank, Punjab National Bank, Jammu & Kashmir Bank and Andhra Bank were slapped a penalty of Rs2.5 crore each.


A penalty of Rs2 crore each was imposed on Yes Bank, Vijaya Bank, Oriental Bank of Commerce and Dhanlaxmi Bank. The other banks which were penalised by the RBI include Deutsche Bank, Development Credit Bank, ING Vysya Bank, Kotak Mahindra Bank and Ratnakar Bank.


Besides, RBI has issued cautionary letters to Citibank, Standard Chartered Bank, Barclays Bank, BNP Paribas, Royal Bank of Scotland, Bank of Tokyo Mitsubishi and State Bank of Patiala.


Following probe into charges levelled by an online portal Cobrapost, RBI has earlier imposed fines totalling Rs10.5 crore on top three private lenders—Axis Bank, HDFC Bank and ICICI Bank.


Although the investigation did not reveal any prima facie evidence of money laundering, RBI said that “any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies”.



Anil Girotra

4 years ago

No one can dispute that the banks are required to follow the KYC norms and to follow anti money laundering guidelines.The present penalty imposed on 22 banks to rthe tune of Rs 49.5 crores is a result of RBI enquiry after cobra post brought out with secret camera that banks were generally willing to open accounts violating guidelines.having been a banker myself I can understand the anxiety of bank managers or sales force in trying to garner accounts(deposits)to meet the targets.Of late after the banks have started working as agent/distributors for insurance products they have been taking insurance business and as it came out from Cobra expose were prepared to violate the KYC/AML guidelines.I must hasten to add that Cobrapost actually did not get any account opened or banks actually violating any guidelines.The cobra expose was limited to the discussion of bank sales force intent to open accounts without following rules.i would only say at this stage that banks would have done a little more due dilligence once the accountb was actually opened.
RBI penalty imposeed obviously gives a feeling that there were grave violations of AML and KYC by these banks.whether the banks internal systems were not able to forewarn these banks of the violations.There are internal /external audits and even annual RBI inspection.I think this is indeed a wake up for the banks/regulators to tighten the systems .May be some kind o0f half yearly review which the banks are supposed to do for KYC/AML and if they dont it should be introduced.There is a need to tighten this area.Of course the Government should also look at the big picture and take measures to remove black money rfrom the system


4 years ago

As service conditions of the inside staff do not permit to reveal such irregularities to none other than his immediate boss, who is main villain, in flouting the rules and used to not reporting his subordinate's apprehensions to his goes on unchecked in the system.

Even whistle blower scheme is not permitting insider's observations of violations on policy matters.

ashwin bahl

4 years ago

Too little and too late.. and what about accountability ? who is responsible for this ??

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)