Companies & Sectors
Coal quality: Govt to set up panel of third party sampling agencies

The Power ministry had said that supply of excessive stones and boulders especially from Bharat Coking Coal Ltd, a unit of Coal India is a matter of concern, which results in high detention of railway rakes and damage to coal handling system of power plants


The Indian government has set a deadline of next month to constitute a panel of third party sampling agencies amid allegations that stones were being dispatched by Coal India Ltd (CIL) even after the introduction of a mechanism to assess the fuel quality.

According to sources, a panel of third party sampling agencies is to be prepared and the consumer shall appoint his sampling agency from the panel and the deadline for this is 31 August 2014.

The issue of fuel quality being supplied to the power plants had also cropped up in the presentation on coal sector earlier made to the Prime Minister Office.

Last week, Piyush Goyal, minister for coal and power, in a written reply to the Lok Sabha had said that to address the issue of fossil fuel quality, third party sampling and analysis facilities at loading ends have been introduced, and the process is being further streamlined.

He was responding to a query on a tiff between CIL and NTPC in regard to conducting the tests of samples of coal by a third party.

NTPC buys a little more than 140 million tonnes of coal and supplies have been coming from both Eastern coalfields and Mahanadi coalfields. It was found that the higher grade slippage (about 7.5%) occurred from supplies emanating from Eastern Coalfields.

Because of the quality issue, NTPC had held up payments, withholding as much as Rs3,035 crore against coal supplied. After a series of discussions and the introduction of third party sampling and strict enforcement of "cash and carry" mechanism by Coal India in October 2013, NTPC cleared its dues since then, but no decision could be made on the old dues. Finally, in the meeting held on 6th March both the companies decided to settle remaining dues based on sampling results at every mine's end for the previous three months.

The issue of third party sampling of coal had also come up for discussions during the Coal India board meeting held this month.

Finance Minister Arun Jaitley during his Budget 2014-15 speech had said that a stringent mechanism for quality control of coal were being put in place.

A system for third party sampling of coal is already in place since October last year at loading points.

The Power Ministry had earlier alleged that stones and boulders were still being dispatched to the power plants.

"Supply of excessive stones and boulders especially from BCCL (Bharat Coking Coal Ltd), a Coal India subsidiary, is a matter of concern. It results in high detention of railway rakes and damage to coal handling system of power plants," said a Power Ministry document.

The mechanism could not address the quality issue and so there is a "need to be done at unloading point", it said.

The issue of coal quality last year had resulted in a standoff between the country's largest power producer NTPC and the world's largest coal producer CIL.

After the government intervened, it was decided that a third party mechanism would be introduced to check coal quality.


Why MSME start-ups fail often?

The absence of hand holding at every step, essential for business success, is proving to be a bane for MSME start-ups


Micro, Small and Medium Enterprises (MSMEs) play a critical role in the economic growth in India. Apart from being the second largest contributor in the employment generation in the country, they play a key role in gross domestic product (GDP) growth and foreign exchange earnings. India UnInc ( A term used by Prof R Vaidyanathan), in spite of being the backbone of the economy, continues to suffer from several issues, which hinders its growth. While financing remains a big constraint, with most of the MSMEs left to themselves to mobilise funds for business needs, the biggest problem that MSMEs face today is the lack of hand holding mechanism for a start up business in India.


Starting a business is a big challenge in India. Most of the people associate the challenge of starting a business to the availability of capital. While funding is a pre-requisite to run a business, the matter does not end here. There are three critical steps that a small business unit will have to take. The first is a set of approvals required to start the business, followed by production of goods and services and the last stage is marketing or selling of goods. Most of the small start-up businesses have no clue about this three-stage process apart from managing the challenge of managing funds.


Let us look at the first step. A business unit needs a set of approvals before it starts functioning. The approval ranges from obtaining a no-pollution certificate for registration with tax authorities to obtaining a no-objection certificate from the fire department, wherever applicable. For instance, not many entrepreneurs know that if they start a business involving household electrical appliances, an approval from Bureau of Indian Standards (BIS) would be required. Even a non-polluting unit would need to file an application with relevant pollution department and obtain an acknowledgment.


A small business unit, in order to avail benefits of various schemes offered by the government needs to be registered with the District Industries Center (DIC). This registration is obtained by submitting a Entrepreneurs Memorandum (EM-1 & EM-2). Since many MSMEs may not understand the significance of this, they may miss out on the benefits provided by the government. Typically EM-I registration is required for for industrial land, credit and pollution clearance. EM-2 is required for eligibility for marketing support, raw material, assistance under industrial / MSME policies such as VAT reimbursement, capital investment subsidy and interest subsidy. Unfortunately, most of the MSMEs remain unregistered in India and fail to become eligible for these benefits.


After a business unit has been set up and is ready for production or providing services, the problem for MSMEs is not over. There can be cost overruns causing businesses to run out of money and fail. There is a complete absence of understanding on lean manufacturing for MSMEs. MSMEs have limited bargaining powers and along with cost escalation, the viability of the business becomes questionable. One simple example of cost escalation could be management of heating, ventilation and air conditioning, which can add to its power supply bills.


The biggest support is required at the time of sales. Lack of awareness about the right market place, where goods can be offered for sale is one of the biggest challenges that MSMEs face. In spite of the government coming out with plans such as purchase preference policy, MSMEs find it difficult to sell their products. There is an online portal which National Small Industries Corp (NSIC) is providing to sell products but such schemes are not very effective. MSMEs often fail to realise the significance of branding their products and at best end up becoming a supplier of raw material for large corporations.


The most significant point in the entire cycle of MSMEs business is its growth from micro to small to medium and to large entities. In this growth path, the first stage is very critical. This phase of successful launch of business can take it further to take off stage. Till the stage of take off, capital is as critical as hand holding for MSMEs.


(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)



Yerram Raju Behara

3 years ago

Small business start-ups fail for a variety of reasons: the form of organization they embrace; the start-up expenses exceeding the expectations eating up the margins up front; lack of proper study into the markets they would like to operate - closed markets, i.e., tying up with as ancillary, or domestic market or export market; the reliance on subsidies that would never reach on time and the sources of finance; the choice of a banker to name the most. If one needs more information, he/she can go through "Small Enterprises - Starting and Growing" authored by me jointly with Dr. R.R. Poojari, published by Excel Publishers Ltd., New Delhi (2009)

HSBC UK closes 'risky' accounts of Muslim groups, individuals

HSBC, which had to pay US authorities $1.9 billion in settlement on money laundering charges, said that to continue providing services to these groups and individuals in UK would be outside the bank’s risk appetite


In a controversial move, global private banking major HSBC has closed a number of “risky” accounts belonging to Muslim groups and individuals in the UK.


HSBC has written to one of London’s biggest mosques at Finsbury Park and other organisations, including an Islamic think tank, saying that to continue providing services would be outside the bank’s “risk appetite”.


It said decisions to close accounts were “absolutely not based on race or religion”.


The bank’s statement said, “We do not discuss relationships we may or may not have with a customer, nor confirm whether an individual or business is, or has been a customer.


“Discrimination against customers on grounds of race or religion is immoral, unacceptable and illegal, and HSBC has comprehensive rules and policies in place to ensure race or religion are never factors in banking decisions,” it said.


Khalid Oumar, one of the trustees of Finsbury Park mosque, questioned the motives behind the letters. He said, “The letters that have been sent and the letters that we received do not give any reason why the accounts were closed in the first place”.


“That has led us to believe that the only reason this has happened is because of an Islamophobic campaign targeting Muslim charities in the UK,” he added.


Until 2005, the mosque was run by Abu Hamza, who in May this year was convicted of terrorism offences in the US.


“The positive work we have done since taking over from Abu Hamza to change the image of the mosque, there is nothing really that can explain (HSBC’s decision),” mosque chairman Mohammed Kozbar told the BBC.


In December 2012, HSBC had to pay US authorities $1.9 billion (£1.2 billion) in a settlement over money laundering, the largest paid in such a case.


It was alleged to have helped launder money belonging to drug cartels and states under US sanctions.


In August last year, it was reported that HSBC asked more than 40 embassies, consulates and High Commissions in the UK to close their accounts.


At the time, the bank said “HSBC has been applying a rolling programme of ‘five filter’ assessments to all its businesses since May 2011, and our services for embassies are no exception”.


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