Companies & Sectors
Restructuring Coal India: Pros and cons

Can Coal India be restructured into smaller independent units, in order to ensure serious competition and to ensure production and development of coal resources in the country?

According to statistical data available, Coal India is heading towards a fall in production during this fiscal, ending this month, when it may find that it has fallen short by about 10 million tonnes. All indications are that it may barely touch about 482 million tonnes.


The estimated daily production is 1.7 million tonnes. There was fear that the strike notice given by its officers, who thankfully, was called off, would have resulted in loss of 5 million tonnes of coal. Earlier, of course, cyclone Phailin did cause production delays due to flooding, but, more importantly officials have claimed that three power utilities refused to pickup coal saying that they have sufficient stocks on hand, which resulted in lower production!. To some extent, this must be accepted.


There appears to be some problems relating to the issues raised by the officers' association, which had threatened to go on this strike. Explaining the reasons, VP Singh, President of the Coal Miners Officers' Association, stated that the major issues that remained unresolved for years cover: revision of pay; releasing performance related payments and implementation of New Pension Scheme.


In fact, the performance related payment, which was agreed upon in 2007 has not been implemented (released) for the last 6 years due to administrative delays on the part of the Union Ministry of Coal and, of course, the Coal India Ltd itself. How does one expect put his heart and soul in the job, when agreed payments are not put into effect, for years on end? According to VP Singh, the arrears of performance related payment and terminal benefit of nearly Rs1,000 crore (since the wage agreement in January 2007) is still to be cleared! It is needless to point out that no one can run such a mammoth organisation with unhappy set of workers.


There has been one other major issue that has plagued the relation between

NTPC (National Thermal Power Corporation) and Coal India Ltd relating to poor quality of coal supplied, and being charged at a higher rate, bearing in mind the caloric values of coal delivered. NTPC buys a little more than 140 million tonnes of coal and supplies have been coming from both Eastern coalfields and Mahanadi coalfields.


Because of the quality issue, NTPC had held up payments, withholding as much as Rs3,035 crore against coal supplied; after series of discussions and the introduction of thrid party sampling and strict enforcement of "cash and carry" mechanism by Coal India in October 2013, NTPC cleared 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 3 months. This reconciliation exercise is expected to be over this fiscal. It was found that the higher grade slippage (about 7.5%) occurred from supplies emanating from Eastern Coalfields.


For CIL, NTPC's business worth Rs32,000 crore could not be compromised at any cost.


CIL carries enormous responsibilities in ensuring timely supply of quality coal to its various consumers. Movement logistics, faster clearance at pit heads and overall evacuation of coal and delivering the same to consumer point are essential for not only its own survival, but can jeopardize national plans.


For instance, captive power plants continue to face coal supply crunch. Press reports indicate that there are 382 captive power plants' applications for 40,000 MW capacities are pending with various ministries, such as Coal, Power and Central Electricity Authority. It is reported that Rahul Sharma, Chairman of Indian Captive Power Producers' Association (ICPPA), has pointed out that fuel scarcity is hampering investments of over Rs2 lakh crore directly in these captive power projects, while another Rs80 lakh crore in end-user industries.


After all, if the captive power producers could have a direct and uninterrupted supply of fuel (coal mostly), the power generated could be supplied to where the demand is and will greatly reduce the burden on the national grid. So, all the subsidiary units of Coal India have to be geared up to increase their production at all costs.


There have been problems relating to allocation of coal blocks, their withdrawal, and the lack of mining activities in some of these, due to reasons beyond the control of the allottee, such as lack of various ministerial clearances. In fact, there have been debates and discussions if such a large responsibility must vest with one organisation. So much so, that the Government of India appointed Deloitte to study this issue.


In fact, Deloitte made an extensive study on the possibilities of Coal India being restructured into smaller independent organizations, in order to ensure serious competition and to ensure production and development of coal resources in the country, from existing, known mines, which are all subsidiary units of CIL.


It was reported that, once the Union Government received a substantial dividend of 290% (an interim one, at that), they shelved the idea of restructuring, though, the Coal Minister Sriprakash Jaiswal told the presspersons, on the sidelines of the inaugural session of the 5th Asian Mining Congress and International Mining Expo (IME 2014), last month, that the Deloitte report is still under study of the Ministry. Though many major internationally reputed miners were conspicuous by their absence, there was interest shown by those who joined the Expo.


Poland, who has fairly long years of experience and mining technology has shown keen interest in participating in India.


Looking at the great responsibility that CIL carries on its shoulders, it may be worthwhile for the Ministry of Coal in particular, and government in general, to consider the recommendations made in the Deloitte report and make it public for serious discussion and debate.


It would greatly depend upon the new government that may take over after the elections, but, privatising the coal mines into independent companies would be one avenue for increasing our coal production and reducing our imports.


Second, would be to invite direct foreign participation by reputed international companies, by specific invitations, would result in increased production and introduction of most available advanced technology and machinery.


This is some food for thought.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also 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.)


Queries at MONEYLIFE FOUNDATION’S Legal Resource Centre

Recovering Money from Birla Power

I had invested Rs1 lakh as fixed deposit in Birla Power on 19 October 2010. The company has not paid any interest for over one and a half years. Now, the FD has matured. However, there is no response from the company about redemption. The Company Law Board (CLB), Delhi, has rejected my application saying “It is not a fixed deposit and does not fall under its purview.” How can I recover my money?

LRC’s Reply: You may appeal to the Delhi Bench of CLB by showing the recent order issued by the Mumbai Bench of CLB in the matter of Birla Power Solution:

The order of the Mumbai Bench of CLB clearly mentions that company FDs come under their jurisdiction; it has the powers to direct a company to pay corporate fixed deposit-holders and has passed many orders under Section 58A (9) of Companies Act, 1956. You can also file a case against the company with the CLB under Section 58A (9) of Companies Act, 1956, or under Section 45QA of the RBI Act, 1934. You need to fill up Form No 4 of CLB regulations and submit it with a demand draft of Rs50 to nearest CLB Bench.

Corporate fixed deposits are unsecured, which means they are unsafe compared to deposits with government banks or secured bonds. It is a risk that you took. If the company has no money, other creditors and the tax department get priority over fixed deposit-holders. Moneylife Foundation, at every seminar, warns people against investing in fixed deposits that are not AAA-rated.

Managing Committee Member Misusing Parking Space

The managing committee (MC) of our cooperative housing society (CHS) allotted open parking space through lots. I did not get a parking space. However, one MC member is not parking her vehicle in her allotted space. She is parking her vehicle in a stilt parking of another member. Another member of the MC, who was not allotted open parking space, is parking his vehicle in the space that was allotted to the lady. When I protested, the MC told me that it has passed a resolution to allow members to exchange their parking space with each other. I am based in Mumbai. Kindly help me.

LRC’s Reply: In your case, the following two Sections of the model byelaws for CHS in Maharashtra are applicable.

1. Section 79 (b): It says that allotment of parking slots is to be made by the managing committee and, once the parking space is allotted, a member cannot transfer that space to anybody.

You can file a complaint to the secretary of your CHS about violation of parking space as the member is not parking her vehicle in the space allotted. Send a reminder after 15 days. Send a second reminder after the next 15 days with a CC to the deputy registrar. Then file a complaint before the deputy registrar about violation of byelaws.

2. Section 83: In case the number of vehicles of eligible members is in excess, the managing committee shall allot the available parking space by ‘lot’ on a yearly basis.

In this case, you will have to wait for the next year’s allotment.

In addition, under Section 32 of the Maharashtra Cooperative Societies Act, 1960, you can ask the MC to show you the books like the minutes of the MC’s meeting in which the decision of not intervening and allowing exchange was taken (Note: the MC has no authority to change/modify any byelaw and the final authority for such decisions rests with the general body meeting only). If the MC refuses to show the books, you can file an application before the deputy registrar asking for the copy of the minutes of MC’s meeting.

However, we would suggest you try to resolve the issue through discussion only, as filing complaints requires time and may result in unnecessary bitterness between neighbours.

Have a legal question? Try our Moneylife Foundation’s Legal Resource Centre. Check out and register at



Suiketu Shah

3 years ago

The suggestions to sort issues with discussions with MC members is fine but in most socities corruption has reached such a stage that anyone who even "questions" MC members are harassed and hence people have to go to courts as the last resort.Typically group of "unable to earn failures in life " get together and become committee members and consider themselves as DemiGods.God forbid,if yr society MC has a lawyer at the helm,he wl think he is the law.

Great-grandchildren Not Part of ‘family’

A concession on payment of stamp duty in cases of immoveable properties being settled among family members cannot be claimed, if the settlement is made in favour of great-grandchildren, the Madras High Court Bench has ruled.

Justice R Sudhakar and Justice VM Velumani held that the definition of the term ‘family’, in the Indian Stamp Act 1899, must be considered as ‘exhaustive’ and not ‘illustrative’. Amendments made by the state government (to the Central enactment) defined the term ‘family members’ to mean father, mother, husband, wife, son, daughter, grandchild, brother, sister, adoptive father, adoptive mother, adopted son and adopted daughter.


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