4company overview

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EXECUTIVE SUMMARY

LPG or Liberalization, Privatization and Globalization as it is referred in short today

have changed the scenario of corporate world and management of enterprises in our

country. It has now become more important to not just manage an organization but to

achieve corporate excellence simultaneously as the future belongs to learning and

performing organizations.

As every business concern irrespective of its size, nature, and age needs an adequate level

of marketing to carry out business operations and survive, sales and marketing becomes

an important and integral part of business. Inadequate sales and marketing means

interruption of production and sales operation whereas bad marketing means

accumulation of idle funds and increase in carrying cost. Therefore, to manage marketing

in any sector is a challenging job.

The project report titled A STUDY OF MARKETING MIX OF THE

CENTRALCOALFIELDS LTD. deals with this matter and is based on the in-house

industrial training at central coalfields limited Ranchi, pertaining to the requirement for

the 3rd

semester of PGDM from ISBS,PUNE.

Unless organization learn to manage its MARKETING MIX, success, will be elusive.

Thus, the effectiveness of an organization depends much on the strength of its

marketing mix which is an important part of the whole system. In the context

of Indias C o a l Industry marketing management holds a greater significance because

coal which is one of the major sources of fuel for any industry, in recent years has

become more crucial for achieving rapid economic growth of our country.Keeping this background in view, an attempt is made to examine the sales and

Marketing in CIL with special reference to central coalfields limited. The project

contains the procedures for the analysis of marketing policy, ratios being used to define

the efficiency of marketing management, its 4Ps, e-auction and the impact of

shortcomings in the management of it. All this had been done to get a clear view

of the techniques of marketing

management in CCL.

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COMPANY OVERVIEW

HISTORY

Central Coalfields LimitedThe Historical MarchCentral Coalfields Limited is a Category-I Mini-Ratna Company since October 2007. During 2009-

10, coal production of the company reached its highest-ever figure of 47.08 million tones, with net

worth amounting to Rs. 2644 crore against a paid-up capital of Rs. 940 crore. Formed on 1st

November 1975, CCL (formerly National Coal Development Corporation Ltd) was one of the five

subsidiaries of Coal India Ltd. which was the first holding company for coal in the country (CIL now

has 8 subsidiaries).

Early HistoryFormation of NCDC (Pre-nationalisation)

CCL had a proud past. As NCDC, it heralded the beginning of nationalization of coal mines in

India.National Coal Development Corporation Ltd. (NCDC) was set up in October, 1956 as

Government-owned Company in pursuance of the Industrial Policy Resolutions of 1948 and 1956 of

the Government of India. It was started with a nucleus of 11 old state collieries (owned by the

Railways) having a total annual production of 2.9 million tonnes of coal. Until the formation of

NCDC, coal mining in India was largely confined to the Raniganj coal belt in West Bengal and the

Jharia coalfields in Bihar (now in Jharkhand), besides a few other areas in Bihar (now in Jharkhand)

and a part of Madhya Pradesh (now Chattishgarh also) and Orissa.From its very beginning, NCDC

addressed itself to the task of increasing coal production and developing new coal resources in theoutlying areas, besides introducing modern and scientific techniques of coal mining.In the Second

Five Year Plan (1956-1961) NCDC was called upon to increase its production from new collieries, to

be opened mainly in areas away from the already developed Raniganj and Jharia coalfields. Eight

new collieries were opened during this period and the production increased to 8.05 million tonnes by

the end of Second Plan.During Third Five Year Plan (1961-1966), though the Corporation had built

up a much larger production capacity, it could not be utilized due to a sluggish domestic coal market.

Production had, therefore, to be pegged down and the development of several collieries undertaken

from the early part of the Plan period, had to be suspended. By this time, the contribution of NCDC

to the nations coal production (67.72 million tones) increased to around 9.6 million tonnes.With

gradual rise in the demand of coal due to commissioning of new power plants and development of

other coal-based industries during Fourth Five Year Plan (1969-1974), NCDCs production increased

to 15.55 million tonnes by the terminal year of Fourth Five Year Plan, i.e, 1973-74.


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Fig. Shovel loading a bottom

discharge dumper in an opencastmine in 1977-78

Fig. Shovel loading a rear

discharge dumper in an opencast

mine 2009-10

NCDC played a pioneering role in Indias coal industry by introducing large-scale mechanization

and modern and scientific methods of coal mining for promoting conservation of high grades of coal

and exploiting deep coking coal seams necessitating heavy capital investment and sophisticated

technical skill. NCDC went in for foreign collaboration with countries such as Poland and the USSR

besides limited collaboration with Japan, West Germany and France. NCDCs role can be truly

assessed by its contribution towards growth of new coal resources in, what are known as, the

outlying areas. The opening of new mines in Madhya Pradesh, Orissa and Maharashtra brought about

a significant change in these regions by creating new opportunities of industrialization and

employment. Development of the Singrauli coalfields has brought coal almost to the door steps of

northern India. With the development and application of improved mining techniques, emphasis on

planning, design and research; introduction of modern mine management systems and an enlightened

industrial relations policy, NCDC was able to provide the infrastructure for the total nationalizationof coal industry in the country.

Nationalization of Coal Mines:

A major event in the history of Indian coal industry during the Fourth Plan Period (1969-74) was the

nationalisation of the erstwhile privately owned coal mines in two phases. In the first phase, the

management of coking coal mines was taken over by the Government of India on 17th Oct. 1971 and

nationalization was effective from 5th January 1972. A state owned company, Bharat Coking Coal

Ltd. was formed for managing coking coal mines. For convenience of management, BCCL collieries

in the East Bokaro coalfields in Bihar (now Jharkhand) were transferred to NCDC, and its projects inCentral Jharia region viz., Sudamdih and Moonidih deep shaft mines were handed over, in stages to

BCCL.In the second phase of nationalisation, the management of non-coking coal mines in the

country, excepting the captive coal mines of the two steel plants, viz, TISCO and IISCO, was taken

over by the Government on 31st January 1973. These mines were subsequently nationalized with

effect from 1st May 1973 and another state-owned company, Coal Mines Authority Ltd. (CMAL)


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came into being with headquarters at Calcutta (now Kolkata) to manage and develop NCDC

collieries and other newly nationalized units. NCDC itself, in this process, became a division of

CMAL which owned 36 collieries under commercial production in Bihar, Orissa, Madhya Pradeshand Maharashtra, besides four coal washeries, one by-product coke oven plant, two large central

workshop and manpower of about 71,000. The formation of CMAL witnessed regrouping of the coal

mines into three divisions, namely, Western, Central and Eastern. The regrouping had to be done for

the convenience of management, keeping in view the geographical location of the collieries.

As a result, NCDC units located in the States of Maharashtra and Madhya Pradesh,

with the exception of Singrauli coalfields, became a part of the Western Division.

The Central Division consisted of all the old collieries of NCDC in Orissa and Bihar

(except Sudamdih and Moonidih which had been handed over to BCCL) and those

acquired by CMAL after take-over in Giridih, East Bokaro, West Bokaro, South

Karanpura, North Karanpura, Hutar & Daltongunj Coalfields in Bihar. The Central

Division consisted of 64 collieries, four coal washeries, one by-product coke oven

plat, on bee-hive coke plant and one central workshop having a manpower of 1,11,500

Formation of CCL

The CMAL, with its three divisions continued upto 1st November 1975 when it was

renamed as Coal India Limited (CIL) following the decision of Govt. of India to

restructure the coal industry. The Central Division of CMAL came to be known asCentral Coalfields Limited and became a separate company with the status of a

subsidiary of CIL, which became the holding company.

Vision

Committed to create eco-fr iendly mining"

The Mission of CCL is to produce and market the planned quantity of coal and coal products

efficiently and economically with due regard to safety, conservation and quality.

The main thrust of CCL in the present context is to orient its operations towards marketrequirements maintaining at the same time financial viability to meet the resource needs.

MISSION

" To become a Worl d class, Innovative, Competit ive & Prof itable

Coal M in ing Operation to achieve Customer Satisfaction

as top priori ty."


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OBECTIVE OF THE COMPANY

Coal mining through efficiently operated mines.

Besides fulfilling coal needs of the customer in terms of quantity, focus on quality, value

addition and beneficiation to the satisfaction of the customers.

Marketing of coal as main product

COMPANY PROFILE

Presently CCL has

Number of Mines58 Operative Mines(21 Underground & 37 Opencast mines)

Washeries

7 Washeries

4 Coaking Coal Washeries (Kathara, Rajrappa,

Kedla & Sawang)- throughput capacity of 9.35 MTPA

3 Non-Coking Coal Washeries (Piparwar, Kargali &

Gidi)

- throughput capacity of 11.72 MTPA

Repair/Workshops1 Central Workshop (ISO 9001) at Barkakana5 Regional Repair/Workshops (3 w/s are ISO 9001)at Jarandih,

Tapin North, Dakra, Giridih & Bhurkunda

Operating Coalfields

6 Coalfields

(East Bokaro, West Bokaro, North Karanpura, SouthKaranpura, Ramgarh & Giridih)

Geological Coal Reserves in CCL Command Area up to 300m & above depth

(As on 01.04.2009)

Reserve Depth 0-300 m Depth 300-1200 mTotal(BT)

Proved

(BT)

Indicated

(BT)

Inferred

(BT)

Total

(BT)

Proved

(BT)

Indicated

(BT)

Inferred

(BT)

Total

(BT)

Coking Coal 6.459 3.942 0.048 10.449 0.967 5.093 1.613 7.673 18.183

Non-Coking

Coal10.612 3.490 1.090 15.191 0.576 3.481 2.115 6.172 21.364


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Total 17.041 7.432 1.138 25.6411.543 8.574 3.728 13.84539.550

65% 35%

CCL Reserve at Depth 0-1200 m Coal Reserve

Proved

(BT)

Indicated

(BT)

Inferred

(BT)

Total

(BT)

Total India

(BT)

CCL % in Total

India Reserve18.614 16.00 4.866 39.55 267.210 15%


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CCL SPREAD

PRODUCTS OF CCL

COKING COAL

These coals, when heated in the absence of air, form coherent beads, free from volatiles, with strong

and porous mass, called coke.

These have coking properties

Mainly used in steel making and metallurgical industries


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Also used for hard coke manufacturing

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.

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

NEW COKING COAL

This coal is not used in metallurgical industries. Because of higher ash content, this coal is not

acceptable for washing in washeries. This coal is used for power utilities and non-core sector

consumers.

NON COKING COAL

These are coals without coking properties.

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

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.

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

MIDDLINGS

Middlings are by-products of the three stage coal washing / beneficiation process, as a fraction of

feed raw coal.


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Used for power generation

Also used by domestic fuel plants, brick manufacturing units, cement plants, industrial plants, etc.

REJECTS

Rejects are the products of coal beneficiation process after separation of cleans and / or middlings, asa fraction of feed raw coal.

Used for Fluidized Bed Combustion (FBC) Boilers for power generation, road repairs, briquette

(domestic fuel) making, land filling, etc.

These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively, obtained

from the Dankuni Coal Complex and other coke oven plants.

Used in industrial furnaces as well as for domestic purposes

CIL COKE / LTC COKE :

CIL Coke / LTC Coke is a smokeless, environment friendly product of the Dankuni Coal Complex,

obtained through low temperature carbonisation.

Used in furnaces and kilns of industrial units

Also used as domestic fuel by halwais, hotels, etc.

COAL FINES / COKE FINES

These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively, obtained

from the Dankuni Coal Complex and other coke oven plants.


TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH:

These are products from Dankuni Coal Complex using low temperature carbonisation of non-coking

coal in vertical retorts.

Used in furnaces and boilers of industrial plants as well as power houses, oil, dye,

pharmaceutical industries, etc.


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Literature review/theoretical background

Marketing mix (Price, Place, Promotion, Product)

THE GENERAL PERSPECTIVE

When marketing their products firms need to create a successful mix of:

the right product

sold at the right price

in the right place

using the most suitable promotion.

To create the right marketing mix, businesses have to meet the following conditions:

The product has to have the right features - for example, it must look good and work well.

The price must be right. Consumer will need to buy in large numbers to produce a healthy

profit.

The goods must be in the right place at the right time. Making sure that the goods arrive when

and where they are wanted is an important operation.

The target group needs to be made aware of the existence and availability of the product

through promotion. Successful promotion helps a firm to spread costs over a larger output.

For example, a company like Kellogg's is constantly developing new breakfast cereals - the product

element is the new product itself, getting the price right involves examining customer perceptions

and rival products as well as costs of manufacture, promotion involves engaging in a range of

promotional activities e.g. competitions, product tasting etc., and place involves using the best

possible channels of distribution such as leading supermarket chains. The product is the central point

on which marketing energy must focus. Finding out how to make the product, setting up the

production line, providing the finance and manufacturing the product are not the responsibility of the

marketing function. However, it is concerned with what the product means to the customer.

Marketing therefore plays a key role in determining such aspects as:

the appearance of the product - in line with the requirements of the market

The function of the product - products must address the needs of customers as identified

through market research.


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The product range and how it is used is a function of the marketing mix. The range may be

broadened or a brand may be extended for tactical reasons, such as matching competition or

catering for seasonal fluctuations. Alternatively, a product may be repositioned to make it

more acceptable for a new group of consumers as part of a long-term plan.

The price

Of all the aspects of the marketing mix, price is the one, which creates sales revenue - all the others

are costs. The price of an item is clearly an important determinant of the value of sales made. In

theory, price is really determined by the discovery of what customers perceive is the value of the

item on sale. Researching consumers' opinions about pricing is important as it indicates how they

value what they are looking for as well as what they want to pay. An organisation's pricing policy

will vary according to time and circumstances. Crudely speaking, the value of water in the Lake

District will be considerably different from the value of water in the desert.

The place

Although figures vary widely from product to product, roughly a fifth of the cost of a product goes

on getting it to the customer. 'Place' is concerned with various methods of transporting and storing

goods, and then making them available for the customer. Getting the right product to the right place

at the right time involves the distribution system. The choice of distribution method will depend on a

variety of circumstances. It will be more convenient for some manufacturers to sell to wholesalers

who then sell to retailers, while others will prefer to sell directly to retailers or customers.

The promotion

Promotion is the business of communicating with customers. It will provide information that will

assist them in making a decision to purchase a product or service. The razzmatazz, pace and

creativity of some promotional activities are almost alien to normal business activities.

The cost associated with promotion or advertising goods and services often represents a sizeable

proportion of the overall cost of producing an item. However, successful promotion increases sales

so that advertising and other costs are spread over a larger output. Though increased promotional

activity is often a sign of a response to a problem such as competitive activity, it enables an

organization to develop and build up a succession of messages and can be extremely cost-effective


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Detail Concept and components of marketing

mix

Marketing involves a number of activities. To begin with, an organization may decide on its target

group of customers to be served. Once the target group is decided, the product is to be placed in the

market by providing the appropriate product, price, distribution and promotional efforts. These are to

be combined or mixed in an appropriate proportion so as to achieve the marketing goal. Such mix of

Product, price, distribution and promotional efforts are known as Marketing Mix. According to

Philip Kotler Marketing Mix is the set of controllable variables that the firm can use to influence the

buyers response. The controllable variables in this context refer to the 4 Ps [product, price, place

(distribution) and promotion]. Each firm strives to build up such a composition of 4Ps, which can

create highest level of consumer satisfaction and at the same time meet its organisational objectives.

Thus, this mix is assembled keeping in mind the needs of target customers, and it varies from one

organization to another depending upon its available resources and marketing objectives. Let us now

have a brief idea about the four components of marketing mix.

Product :Product refers to the goods and services offered by the organization. A pair of shoes, a plate of dahi-

vada, a lipstick, all are products. All these are purchased because they satisfy one or more of our

needs. We are paying not for the tangible product but for the benefit it will provide. So, in simple

words, product can be described as a bundle of benefits which a marketer offers to the consumer for

a price. While buying a pair of shoes, we are actually buying comfort for our feet, while buying a

lipstick we are actually paying for beauty because lipstick is likely to make us look good. Product

can also take the form of a service like an air travel, telecommunication, etc. Thus, the term product

refers to goods and services offered by the organization for sale.

Price:Price is the amount charged for a product or service. It is the second most important element in the

marketing mix. Fixing the price of the product is a tricky job. Many factors like demand for

A product, cost involved, consumers ability to pay, prices charged by competitors for similar

products, government restrictions etc. have to be kept in mind while fixing the price. In fact, pricing

is a very crucial decision area as it has its effect on demand for the product and also on the

profitability of the firm.

Place:Goods are produced to be sold to the consumers. They must be made available to

the consumers at a place where they can conveniently make purchase. Woollens are

manufactured on a large scale in Ludhiana and you purchase them at a store from the


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nearby market in your town. So, it is necessary that the product is available at shops in your town.

This involves a chain of individuals and institutions like distributors, wholesalers and retailers who

constitute firms distribution network (also called a channel of distribution).The organization has to

decide whether to sell directly to the retailer or through the distributors/wholesaler etc. It can even

plan to sell it directly to consumers. The choice is

guided by a host of factors about which you will learn later in this chapter.

Promotion:If the product is manufactured keeping the consumer needs in mind, is rightly priced and made

available at outlets convenient to them but the consumer is not made aware about its price, features,

availability etc, its marketing effort may not be successful. Therefore promotion is an important

ingredient of marketing mix as it refers to a process of informing, persuading and influencing a

consumer to make choice of the product to be bought. Promotion is done through means of personal

selling, advertising, publicity and sales promotion. It is done mainly with a view to provideinformation to prospective consumers about the availability, characteristics and uses of a product. It

arouses potential consumers interest in the product, compare it with competitors product and make

his choice. The proliferation of print and electronic media has immensely helped the process of

promotion.

PRODUCT

As stated earlier, product refers to the goods and services offered by the organization for sale. Here

the marketers have to recognize that consumers are not simply interested in the physical features of a

product but a set of tangible and intangible attributes that satisfy their wants. For example, when a

consumer buys a washing machine he is not buying simply a machine but a gadget that helps him in

washing clothes. It also needs to be noted that the term product refers to anything that can be offered

to a market for attention, acquisition, or use. Thus, the term product is defined as anything that can

be offered to a market to satisfy a want. It normally includes physical objects and services. In a

broader sense, however, it not only includes physical objects and services but also the supporting

services like brand name, packaging accessories, installation, after sales service etc. Look at the

definitions by Stanton and McCarthy as given in the box.

William J. Stanton

Product is a set of tangible and intangible attributes including packaging, colour, price,

manufacturers prestige, retailers prestige and manufacturers and retailers services which buyer

may accept as offering satisfaction of wants and services.


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Jerome McCarthy

A product is more than just a physical product with its related functional and aesthetic features. It

includes accessories, installation, instructions on use, the package, perhaps a brand name, which

fulfills some psychological needs and the assurances that service facilities will be available to meet

the customer needs after the purchase.

PRODUCT CLASSIFICATION

Product can be broadly classified on the basis of (1) use, (2) durability, and (3) tangibility. Let us

have a brief idea about the various categories and their exact nature under each head, noting at the

same time that in marketing the terms product and goods are often used interchangeably.

1. Based on use, the product can be classified as:

(a) Consumer Goods; and

(b) Industrial Goods.

(a) Consumer goods: Goods meant for personal consumption by the households or ultimate

consumers are called consumer goods. This includes items like toiletries, groceries, clothes etc.

Based on consumers buying behaviour the consumer goods can be further classified as:

(i) Convenience Goods;

(ii) Shopping Goods; and

(iii) Speciality Goods.

(1) Convenience Goods :

Do you remember, the last time when did you buy a packet of butter or a soft drink or a grocery

item? Perhaps you dont remember,or you will say last week or yesterday. Reason is, these goods

belong to the categories of convenience goods which are bought frequently without much

planning or shopping effort and are also consumed quickly. Buying decision in case of these goods

does not involve much pre-planning. Such goods are usually sold at convenient retail outlets.

(ii) Shopping Goods:

These are goods which are purchased less frequently and are used very slowly like clothes, shoes,household appliances. In case of these goods, consumers make choice of a product considering its

suitability, price, style, quality and products of competitors and substitutes, if any. In other words, the

consumers usually spend a considerable amount of time and effort to finalise their purchase decision

as they lack complete information prior to their shopping trip. It may be

noted that shopping goods involve much more expenses than convenience goods.


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(iii) Specialty Goods:

Because of some special characteristics of certain categories of goods people generally put special

efforts to buy them. They are ready to buy these goods at prices at which they are offered and also

put in extra time to locate the seller to make the purchase. The nearest car dealer may be ten

kilometres away but the buyer will go there to inspect and purchase it. In fact, prior to making a trip

to buy the product he/she will collect complete information about the various brands. Examples of

speciality goods are cameras, TV sets, new automobiles etc.

(b) Industrial Goods:

Goods meant for consumption or use as inputs in production of other products or provision of some

service are termed as industrial goods. Theseare meant for non-personal and commercial use and

include (i) raw materials, (ii) machinery, (iii) components, and (iv) operating supplies (such as

lubricants, stationery etc). The buyers of industrial goods are supposed to be knowledgeable, cost

conscious and rational in their purchase and therefore, the marketeers follow different pricing,

distribution and promotional strategies for their sale.

It may be noted that the same product may be classified as consumer goods as well as industrial

goods depending upon its end use. Take for example the case of coconut oil. When it is used as hair

oil or cooking oil, it is treated as consumer goods and when used for manufacturing a bath soap it is

termed as industrial goods. However, the way these products are marketed to these two groups are

very different because purchase by industrial buyer is usually large in quantity and bought either

directly from the manufacturer or the local distributor.

2. Based on Durability, the products can be classified as:

(a) Durable Goods; and

(b) Non-durable Goods.

(a) Durable Goods:

Durable goods are products which are used for a long period i.e., for months or years together.

Examples of such goods are refrigerator, car, washing machine etc. Such goods generally require

more of personal selling efforts and have high profit margins. In case of these goods, sellers

reputation and presale and after-sale service are important determinants of purchase decision.

(b) Non-durable Goods:

Non-durable goods are products that are normally consumed in one go or last for a few uses.

Examples of such products are soap, salt, pickles, sauce etc. These items are consumed quickly and

we purchase these goods more often. Such items are generally made available by the producer

through large number of convenient retail outlets. Profit margins on such items are usually kept low

and heavy advertising is done to attract people towards their trial and use.


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3. Based on tangibility, the products can be classified as:

(a) Tangible Goods; and

(b) Intangible Goods.

(a) Tangible Goods:

Most goods, whether these are consumer goods or industrial goods and whether these are durable or

non-durable, fall in this category as they have a physical form that can be touched and seen. Thus, all

items like groceries, cars, raw-materials, machinery etc. fall in the category of tangible goods.

(b) Intangible Goods:

Intangible goods refer to services provided to the individual consumers or to the organizational

buyers (industrial, commercial, institutional, government etc.). Services are essentially intangible

activities which provide want or need satisfaction. Medical treatment, postal, banking and insurance

services etc., all fall in this category.

PRICING AND FACTORS AFFECTING PRICING

DECISIONS

As stated earlier price is the consideration in terms of money paid by consumers for the bundle of

benefits he/she derives by using the product/ service. In simple terms, it is the exchange value of

goods and services in terms of money. Pricing (determination of price to be charged) is another

important element of marketing mix and it plays a crucial role in the success of a product in the

market. If the price fixed is high, it is likely to have an adverse effect on the sales volume. If, on the

other hand, it is too low, it will adversely affect the profitability. Hence, it has to be fixed after taking

various aspects into consideration. The factors usually taken into account while determining the price

of a product can be broadly described as follows:

(a) Cost:

No business can survive unless it covers its cost of production and distribution. In large number of

products, the retail prices are determined by adding a reasonable profit margin to the cost. Higher the

cost, higher is likely to be the price, lower the cost lower the price.


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(b) Demand:

Demand also affects the price in a big way. When there is limited supply of a product and the

demand is high, people buy even if high prices are charged by the producer. But how high the price

would be is dependent upon prospective buyerscapacity and willingness to pay and their preference

for the product. In this context, price elasticity, i.e. responsiveness of demand to changes in price

should also be kept

in view.

(c) Competition:

The price charged by the competitor for similar product is an important determinant of price. A

marketer would not like to charge a price higher than the competitor for fear of losing customers.

Also, he may avoid charging a price lower than the competitor. Because it may result in price war

which we have recently seen in the case of soft drinks, washing powder, mobile phone etc.

(d) Marketing Objectives:

A firm may have different marketing objectives such as maximisation of profit, maximisation of

sales, bigger market share, survival in the market and so on. The prices have to be determined

accordingly. For example, if the objective is to maximise sales or have a bigger market share, a low

price will be fixed. Recently one brand of washing powder slashed its prices to half, to grab a bigger

share of the market.

(e) Government Regulation:

Prices of some essential products are regulated by the government under the Essential Commodities

Act. For example, prior to liberalization of the economy, cement and steel prices were decided by the

government. Hence, it is essential that the existing statutory limits, if any, are also kept in view while

determining the prices of products by the producers.

METHODS OF PRICE FIXATION

Methods of fixing the price can be broadly divided into the following categories.

1. Cost based pricing

2. Competition based pricing

3. Demand based pricing

4. Objective based pricing

1. Cost Based Pricing

Under this method, price of the product is fixed by adding the amount of desired profit margin to the

cost of the product. If a particular soap costs the marketer Rs. 8 and he desires a profit of 25%, the

price of the soap is fixed at Rs 8 + (8x25/100) =Rs. 10. While calculating the price in this way, all

costs (variable as well as fixed) incurred in manufacturing the product are taken into consideration.


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2. Competition Based Pricing

In case of products where market is highly competitive and there is negligible difference quality of

competing brands, price is usually fixed closer to the price of the competing brands. It is called

young rate pricing and is a very convenient method because the marketeers do not have to worry

much about demand and cost and effect the change as per the changes by the industry leaders.

3. Demand Based Pricing

At times, prices are determined by the demand for the product. Under this method, without paying

much attention to cost and competitors prices, the marketeers try to ascertain the demand for the

product. If the demand is high they decide to take advantage and fix a high price. If the demand is

low, they fix low prices for their product. At times they resort to differential prices and charge

different prices from different groups of customers depending upon their perceived values and

capacity to pay. Take the case of cinema halls where the rates of tickets differ for the different sets of

rows in the hall.

4. Objective Based Pricing

This method is applicable to introduction of new (innovative) products. If, at the introductory stage

of the products, the organization wishes to penetrate the market i.e., to capture large parts of the

market and discourage the prospective competitors to enter into the fray, it fixes a low price.

Alternatively, the organization may decide to skim the market i.e., to earn high profit by taking

advantage of a group of customers who give more importance to their status or distinction and are

willing to pay even a higher price for it. In such a situation they fix quite high price at the

introductory stage of their product and market it to only those customers who can afford it.

PLACE

You are aware that while a manufacturer of a product is located at one place, its consumers are

located at innumerable places spread all over the country or the world. The manufacturer has to

ensure the availability of his goods to the consumers at convenient points for their purchase. He may

do so directly or, as stated earlier, through a chain of middlemen like distributors, wholesalers and

retailers. The path or route adopted by him for the purpose is known as channel of distribution. A

channel of distribution thus, refers to the pathway used by the manufacturer for transfer of the

ownership of goods and its physical transfer to the consumers and the user/buyers (industrial

buyers).Stanton has also defined it as A distribution channel consists of the set of people and firms

involved in the transfer of title to a product as the product moves from producer to ultimate consumeror business user. Basically it refers to the vital links connecting the manufacturers and producers

and the ultimate consumers/users. It includes both the producer and the end user and also the

middlemen/agents engaged in the process of transfer of title of goods.


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Primarily a channel of distribution performs the following functions:

(a) It helps in establishing a regular contact with the customers and provides them the

necessary information relating to the goods.

(b) It provides the facility for inspection of goods by the consumers at convenient points

to make their choice.

(c) It facilitates the transfer of ownership as well as the delivery of goods.

(d) It helps in financing by giving credit facility.

(e) It assists the provision of after sales services, if necessary.

(f) It assumes all risks connected with the carrying out the distribution function.

TYPES OF CHANNELS OF DISTRIBUTION

Generally we do not buy goods directly from the producers. The producers/manufacturers usually use

services of one or more middlemen to supply their goods to the consumers. But sometimes, they do

have direct contact with the customers with no middlemen in between them. This is true more for

industrial goods where the customers are highly knowledgeable and their individual purchases are

large. The various channels used for distribution of consumer goods can be described as follows:


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FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNEL

Choice of an appropriate distribution channel is very important as the pricing as well as promotion

strategy are dependent upon the distribution channel selected. Not only that, the route which the

product follows in its journey from the manufacturer to the consumer also involves certain costs.

This in turn, affects not only the price of the product but also the profits. Choice of inappropriate

channels of distribution may result in lesser profits for the manufacturer and higher price from the

consumer. Hence, the manufacturer has to be careful while finalising the channel of distribution to be

used. He should pay attention to the following factors while making his choice.

(a) Nature of Market: There are many aspects of market which determine the choice of channel of

distribution. Say for example, where the number of buyers is limited, they are concentrated at few

locations and their individual purchases are large as is the case with industrial buyers, direct sale may

be the most preferred choice. But in case where number of buyers is large with small individual

purchase and they are scattered, then need may arise for use of middlemen.


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(b) Nature of Product:

Nature of the product considerably affects the choice of channel of distribution. In case the product is

of technical nature involving a good amount of pre-sale and after sale services, the sale is generally

done through retailers without involving the wholesalers. But in most of the consumer goods having

small value, bought frequently in small quantities, a long channel involving agents, wholesalers and

retailers is used as the goods need to be stored at convenient locations. Items like toiletries, groceries,

etc. fall in this category. As against this in case of items like industrial machinery, having large value

and involving specialised technical service and long negotiation period, direct sale is preferred.

(c) Nature of the Company:

A firm having enough financial resources can afford to its own a distribution force and retail outlet,

both. But most business firms prefer not to create their own distribution channel and concentrate on

manufacturing. The firms who wish to control the distribution network prefer a shorter channel.

(d) Middlemen Consideration:

If right kind of middlemen having the necessary experience, contacts, financial strength and integrity

are available, their use is preferred as they can ensure success of newly introduced products. Cost

factors also have to be kept in view as all middlemen add their own margin of profit to the price of

the products. But from experience it is learnt that where the volume of sales are adequate, the use of

middlemen is often found economical and less cumbersome as against direct sale.

PROMOTION

Promotion refers to the process of informing and persuading the consumers to buy certain product.

By using this process, the marketeers convey persuasive message and information

to its potential customers. The main objective of promotion is to seek buyers attention

towards the product with a view to arouse his interest in the product;

inform him about its availability; and

inform him as to how is it different from others.

It is thus a persuasive communication and also serves as a reminder. A firm uses different

tools for its promotional activities which are as follows:

Advertising

PublicityPersonal selling

Sales promotion

These are also termed as four elements of a promotion mix. Let us have a brief idea

about these promotion tools.

1. Advertising: Advertising is the most commonly used tool for informing the present and

prospective consumers about the product, its quality, features, availability, etc. It is a paid form of


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non-personal communication through different media about a product, idea, a service or an

organization by an identified sponsor. It can be done through print media like newspaper, magazines,

billboards, electronic media like radio, television, etc. It is a very flexible and comparatively low cost

tool of promotion.

2. Publicity: This is a non-paid process of generating wide range of communication to contribute a

favourable attitude towards the product and the organization. You may have seen articles in

newspapers about an organization, its products and policies. The other tools of publicity are press

conference, publication and news in the electronic media etc. It is published or broadcasted without

charging any money from the firm. Marketeers often spend a lot of time and effort in getting news

items placed in the media for creation of a favourable image of the company and its products.

3. Personal selling:

You must have come across representatives of different companies knocking at your door and

persuading you to buy their product. It is a direct presentation of the product to the consumers or

prospective buyers. It refers to the use of salespersons to persuade the buyers to act favourably and

buy the product. It is most effective promotional tool in case of industrial goods.

4. Sales promotion:

This refers to short-term and temporary incentives to purchase or induce trials of new goods. The

tool include contests, games, gifts, trade shows, discounts, etc. Sales promotional activities are often

carried out at retail levels.


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OBJECTIVE FOR STUDY

To analyze the MARKETING MIX of the central coalfields ltd.

To know and understand the present sales and marketing system of

Central Coalfield Limited (CCL), Ranchi.

To know the present scenario of Central Coalfield Limited.

To know the marketing and distribution strategies (method &

problem) in Central Coalfield Limited (CCL)

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

organization.

To know the dispatches of coal to consumers.

To study the competitors of the company.

To know about e-auction

To know the process of e-auction

To know about New Coal Distribution Policy


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RESEARCH METHODOLOGY:

Research is the process of systematic and in depth study or search of any particular topic, subject

by the collection, presentation and interpretation of relevant details or data. It is a careful search

or enquiry into any subject or subject matter which is an endeavor to discover or to find out

valuable facts which would be useful for further application or utilization.

The research methodology that we have used is the survey method. Surveys represent one of the

most common types of quantitative, social science research. A survey is a method of collecting

information about a human population. In a survey, direct (or indirect) contact is made with the

units of the study (e.g., individuals, organizations, communities) by using systematic methods of

measurement such as questionnaires and interviews. Many surveys are conducted around the

world each year. While the purpose, topics, and size of these surveys varies, similar steps are

followed in the planning, development, and implementation of each. In our survey research, we

have selected a sample of respondents from a population and administered a standardized

questionnaire to them. The questionnaire or survey is completed by the person being surveyed.

The process of our survey-

Identify the Purpose - To determine the purpose of a survey, two questions must be asked: (1)

what information is wanted or needed, and (2) where can this information be found. A researcher

may want to describe a population or program, plan a new program, or evaluate an existing one.

Develop the Questionnaire- after finding the purpose of the survey and population of interest is

determined, a questionnaire must be developed. The questionnaire will be designed to provide the

information being sought.

Identify the Setting- our Surveys will be conducted in worksites. It is important for us to pick the

location where the population of interest can be accessed


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Identify the Mode - Our mode is to get the response by making respondents fill our questionnaire

that we have prepared for the respondents

Select the Sample-The quality of the sample often determines the quality of the data. Samples of

convenience or volunteer samples produce data representative only of persons who participate in

the survey. Scientifically selected samples can be representative of a larger population and are

used to generalize findings to persons beyond those who participate in the survey.

Conduct the Fieldwork- we will conduct the field work keeping in mind the goal to standardize

data collection as much as possible to assure quality control throughout the fieldwork, to obtain a

high response rate, and, often, to protect the privacy of respondents.

Enter, Edit, and Prepare Data for Analysis-we will enter the data, edit the data prepare the data

and using excel sheet.

Conduct Analyses- in this stage our aim will be to analyse the data collected in the survey done.

We will use tools like MS word and MS excel to draw the data representation diagrams.

Write Reports- The last part of the survey will be to write the report after proper analysis of the

data collected in the survey. The report will be concise and will throw light on all the aspects of

the survey.

Data collection:

Collection of data refers to a purposive gathering of information relevant to the subject matter

under study and methods used depend mainly on the nature, purpose and scope of the enquiry to

be undertaken as well as on the availability of resources and time. The researcher should keep in

mind to types of data, primary data and secondary data. The primary data are those, which are

collected fresh and for the first time, and thus happen to be original in character. The secondary

data, on the other hand, are those which have already been collected by someone else and which

have already been passed through the statistical process. Both, primary and secondary were used

in accomplishment of objective of the research.


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Tools of data collection:-

Primary data collection:

Primary data is the data which is collected by the researcher directly from his ownobservation and experiences. This method is quite popular, particular in case of big enquires.

Secondary data collection:

All methods of data collection can supply quantitative data (numbers, statistics or financial) or

qualitative data. Quantitative data may often be presented in tabular or graphical form.

Secondary data are those which have already been collected by others,

When it is not possible to collect data in primary form, the researches may take the help of

secondary data. They are those which have already been collected with some other view in

mind. They are collected for serving the objective other than what the researcher might have

in mind the sources of secondary data are, Companyshand book, Surfing on internet to the

related site, Study of books.

The tool used for data collection for the topic is primary data and method used to conduct the

survey is questionnaire. In our survey we have meet with the people and also companies with

the face to face interaction we filled our entire questionnaire.

LIMITATIONS OF OUR SURVEY:

The sample size of our survey is a bit small. To get a better idea about the topic of

survey we need a larger sample size.

Sometime the respondents reply in haste .This causes lack of accuracy.


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SOURCE OF INFORMATION

The information is based on:

Primary Data: primary data were gathered through personal interviews of CCL official.

Secondary Data: secondary data were collected from the various published report, circulars,

journals and books relating to Coal and publication of different institution including foreign

magazines on the topic.

Constraints in Data collection:

Different Coal consumers belonging to public enterprises and private industries

could not be interviewed due to shortage of time. Most of the executives of CCL, Consumers

and railways officers are reluctant to give relevant information due to their internal policy of

maintaining secrecy.


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COMPANY SPECIFIC MARKETING MIX

CCL PRODUCT

COKING COAL

These coals, when heated in the absence of air, form coherent beads, free from volatiles, with

strong and porous mass, called coke.

These have coking properties

Mainly used in steel making and metallurgical industries

Also used for hard coke manufacturing

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.

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

NEW COKING COAL

This coal is not used in metallurgical industries. Because of higher ash content, this coal is not

acceptable for washing in washeries. This coal is used for power utilities and non-core sector

consumers.

NON COKING COAL

These are coals without coking properties.

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


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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.

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

MIDDLINGS

Middlings are by-products of the three stage coal washing / beneficiation process, as a fraction of

feed raw coal.

Used for power generation

Also used by domestic fuel plants, brick manufacturing units, cement plants, industrial plants,etc.

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.

These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively,

obtained from the Dankuni Coal Complex and other coke oven plants.


CIL COKE / LTC COKE :

CIL Coke / LTC Coke is a smokeless, environment friendly product of the Dankuni Coal

Complex, obtained through low temperature carbonization.

Used in furnaces and kilns of industrial units

Also used as domestic fuel by halwais, hotels, etc.


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COAL FINES / COKE FINES

These are the screened fractions of feed raw coal and LTC coke / CIL Coke respectively,

obtained from the Dankuni Coal Complex and other coke oven plants.


TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH:

These are products from Dankuni Coal Complex using low temperature carbonization of non-

coking coal in vertical retorts.

Used in furnaces and boilers of industrial plants as well as power houses, oil, dye,

pharmaceutical industries, etc.

MAJOR CONSUMERS OF CCL

A. Power Houses:

Jharkhand State Electricity Board

Bihar State Electricity Board

Damodar Valley Corporation

N.T.P.C.

P.S.E.B.

G.S.E.B.

Delhi Vidyut Board

B. Steel Plants:

SAIL

VIZAG Steel

TISCO

C. Railways


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D. Government Parties:

Defence

H.E.C.

Fertilizers

B.H.E.L.

E. Private Parties:

Lemo Cement Company

Indian Aluminum Company Ltd.

Tata Sponge Iron Ltd.

National Fertilizer Limited, etc.


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PRICE

DOMESTIC PRICE FIXATION

Government of India deregulated the price of Non-Coking Coal of grades A, B & C. Coking

Coal and semi / weekly Coking Coal on 22.03.1996. Subsequently, on 12.03.1997

Government of India deregulated the price of non- coking coal of grade D, hard coke and

soft coke and also allowed Coal India Ltd. to fix coal price of grade E, F & G till jan 2000

once in every six months updating cost indices as per escalation formula contained in the

1987 report of the Bureau of Industrial cost and price. With effect from 01.01.200, CIL is

free to fix the prices of such grades of coal in relation to the market prices.

Pursuant of the above, CIL fixed the prices of deregulated coal from time to time and last

such revision has been made on 12.12.2007.

Grade wise basic price of coal at the pit head excluding statutory levies for Run of mine

(ROM) Non long flame Coal, Long Flame Coal, Cooking Coal, Semi Coking Coal &

Weakly Coking Coal, Direct Feed Coal, Assam

Coal for various subsidiaries of CIL are table below:

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

(In Rupees/ Tone)

Field/ Co. A B C D E F G

ECL(for 8 units vide AnnexII)

1710 1540 1290 1040 780 610 430

ECL / Mugma(for 16 unitsvide Annex IV)

1970 1750 1500 1240 990 740 480

ECL / Rajmahal - - - - 1020 870 700

BCCL 1660 1510 1250 1040 830 660 470

CCL 1620 1460 1220 1000 790 630 450

NCL 1490 1340 1100 920 740 580 430

SECL 1310 1220 1050 880 730 570 430

MCL 1280 1130 950 790 620 480 350


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PLACE


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New Coal Distribution Policy

The New Coal Distribution Policy was announced by the Government of India in October07.

The Schematic presentation of the policy looks like as below:-

Policy provisions:

1. The Core-Non Core classification done away with2. Defence & Railway to get full requirement at notified price.3. Power & FTZ Sector to get 100% of normative requirement through FSA at fixed price.4. All other to get 75% of normative requirement through FSA.5. Small & Medium Enterprise Sector having requirement up to 4200MT per year to get

coal from Agencies to be nominated by States/UTs

6. All existing linkageholders required to execute FSA for continuation of coal supply.7. Erstwhile Non-core consumers having less than 4200 MTPA requirement shall have

option for FSA with Coal Company or to get coal from State Agency.8. For new commitments to

Power , Cement and Sponge Iron sectors -CIL to issue LoA after approval ofapplications by the SLC(LT)

For other sector CIL will be responsible for issuance of LoA

9. LoA will have validity for 24/12 months for Power/other consumers respectively.

Domestic Coal

Imported Coal

THE NEW POLICY - IN A NUTSHELL

FSA with State

Nominated Agencies(8 mt)DIRECT FROM CIL

FSA (100%)

FSA (75%)

E-auction (10% of

Production.)

Spot auction

Forward auction

POWER/CPP/FTZ/

DEF

OTHER

INDUSTRIES


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10.Loads to be converted to enforceable FSAs after completion of stipulatedmilestones/conditions within the given time.

11.CIL, to meet full domestic requirement of coal under FSA, even by resorting to import, iffeasible

12.Fresh e auction to introduce for providing source to consumers otherwise unable to

procure from the available institutional mechanism.13.10% of the annual quantity to be earmarked for e-auction14.Forward e-auction scheme for industrial consumer to be introduced for ensuring long

term requirement

15.Supply of coal to Steel Plants on FSA- price on the basis16.Of import parity pricing.17.Discipline in economic use of coal is a thrust area.

Based upon above policy provisions following actions have been taken by CIL:-

1. For Existing Linkage Holders

M/S CRISIL developed three Model FSAs based on annual coal requirements for other than

Power Utilities and IPPs

Model A - < 50,000 MT / Yr Model B - > 50,000 and < 400,000 Mt/Yr Model C - > 400,000 Mt/ Yr

a. SLC/LT categoryof consumers ( POWER/CPP/CEMENT/FTZ)

Fertilizer /CPP/Cement/Sponge units fit into the above model as per theirrequirement the entitled annual qty. of 2007-08 shall be the ACQ ** for

such units.

FSA has also been developed for ongoing supplies to State Gencos/PowerUtilities.

FSA for existing Private Power Utilities also put in operation.


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**.Norms for SLC/LT cleared units to be decided by MOC

b. Non SLC/LT categoryconsumers

The above A/B/C Model shall be applicable for the existing validnon/SLC LT consumers with ACQ of 75% of the normative qty. (till such

time the normative Quantity is finalized the MPQ of such units shall be

the ACQ).

FSA for Sate Nominated Agencies to take care of coal supplies to suchagencies from designated Coal companies developed by CRISIL and

introduced after competent approval. The State nominated agencies tocater the need of coal for new/existing consumers having requirement up

to 4200MT/PA. In 2008-09 8 mill ton of coal earmarked for distributionthrough state agencies making state wise apportionment keeping with the

earlier supply to Sates through NCCF etc.

2. For New Consumers coming through LoA route

A. Letter of Assurance (LOAs):

All new consumers in both SLC/LT and non SLC/LT category are to apply for LoAs forwhich following LOA s are available:

For SLC(LT)

cleared Units

IPPs & Private Gencos

State owned Power

Utlts.

Sponge Iron Units

Cement Units

CPP Units

Fertiliser


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For Non SLC(LT)

units

Al/PAPER/ISP Aluminum

Paper

Integrated Steel plants

Other Non-Core

Industries

Ceramic, Tiles and Glass

Refractory

Pharamceuticals and

Drugs

Leather

Dyeing and Printing

Sugar

Textile and Rayon

Softcoke manufacturing

units

Distillery

Engineering &

Machinery and Foundry

& Forging

Coke ovens

Chemicals

Rubber

Tea

Lime Manufacturing

Soap

Tobacco

The legally enforceable LoAs, are developed by M/s CRISIL .


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On issuance of notice inviting application for LoA by the coal companysapplicantshave to submit Commitment Guarantee equivalent 10% of the base price of the

Quantity applied for along with LoA application.

Under the LoAsstipulated milestones to be achieved by the LoA holders within 24month for Power Sector (Power Utilities, IPPs and CPPs) and 12 months for other

consumers from the date of issuance of the LoA. Validity of CG to cover LoA period plus 4 months

Additional CG of 10% is payable on each failure of achieving mile stones under theLOA up to a ceiling of original CG Value

CG shall stand encashable in the event ofo failure to achieve mile stones in six months time and fails to furnish additional

CG or

o failure to achieve listed miles stones in the stipulated periodo failure to sign FSA within 3 months of expiry of stipulated period on

achieving mile stones

For SLC(LT) cleared Units

SLC/LT cleared units shall be forwarded to CIL for allocation of Grade/Source.

A Committee for Letter of Issuance (CLOA) is set up at CIL with member ofsubsidiary sales company and CSM/Commercial as the Convener of the committee.

CLOA recommendations are ratified through CMDs meet and then the CLOAdecision communicated to coal companies for issuance of Notice for LOAapplication.

For Non SLC/LT Units

o LoAs have been developed by M/s CRISIL but the mechanism for issuance ofLoA is yet to be decided at CIL. A committee constituted for the purpose and therecommendation has got approval of the CMDs but CIL Board has directed to

keep the issue on hold till the coal availability scenario is cleared after the

pending FSA issue is settled with existing Power Utilities

B. Fuel Supply Agreements (FSA)

o M/S CRISIL developed three Model FSAs based on annual coal requirements forother Non-Power consumers but including CPPs


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Model A - < 50,000 MT / Yr Model B - > 50,000 and < 400,000 Mt/Yr Model C - > 400,000 Mt/ Yr

a. SLC/LT categoryof consumers ( POWER/CPP/CEMENT/FTZ)

Model FSA is in place for New SEBs and Power Utilities**

Model FSA for New Private Power Utilities

Other SLC/LT category units to be governed by A/B/C model of FSAas per annual requirement through LoA route

**The above also to cover the LoAs issued prior to NCDP and units to be

commissioned after introduction of NCDP against old linkages.

b. Non SLC/LT categoryconsumers

The A/B/C Model shall take care of the new consumers in the nonSLC/LT category subject finalization LOA issuance mechanism andapplicable share of imported coal.

NOTES:

A) Share of Imported Coal in the supply of commitment to consumers falling under

New Category of consumers coming through LoA route.

As of now it is decided that a mix of indigenous coal up to 50% of ACQand balance from imported coal be supplied under the FSA a MOU in

this regard to be executed by the Loa holders which shall clearly delineate

the supply through imported source and entitle supply under FSA for theindigenous part.

The Condition Precedent in the FSA takes care of the obligation ofsupplier for imported supply.

B) Existing Power utilitiesmost of them is yet to execute FSA on issues of Triggerand higher level of ACQ. As per the meeting held between CEA Chairman NTPC


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and CIL- Power Utilities to get 90% Trigger level in place of 60% for all supplies

against existing linkages, however, there will be special price applicable after

90% of ACQ materialization. FSA shall be for 20 years tenure with a reviewclause of ACQ every five years.

C) Time to time certain dispensationsin the existing FSA/LoA have been approvedby the CIL Board which are :-

a. Cokery Units :- In view of lesser availability of coking coalthe trigger levelfor cookery units reduced to 20% of ACQ and consequently the security

deposit is reduced to 2% of ACQ

b. Option for taking coal either by road or rail under FSA is provided.c. FSA consumers have been given option to make payment through IRLC for

supply by rail. Backed by advance deposit of coal value covering 15 days

monthly program in multiple of rakes.

d. FSA consumers drawing coal by road have been given option to make partpayment commensurate to drawl of coal against monthly entitled Qty.

e. For supply of coal by rail under FSA dispensation provided for makingadvance payment of coal value equivalent to 15 days ACQ by allowing 8

days equivalent of coal (ACQ) value by way of BG plus 7 days equivalent ofcoal (ACQ) value by way of Cash subject to a minimum amount equivalent to

As delivered price ofcoal for one rake or multiple thereof.

f. FSA consumers under Model A (up to 50,000 MTPA) is allowed to depositSD in four installments (1 % of ACQ) subject to their compensation shallbe derived on quarterly cumulated basis and SD shall stand encashable in case

of the outstanding ever exceeds 1 % value of the SD.


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PROMOTION

Promotion is the development and discrimination of persuasive communication about the

offer designed to attract customers and to persuade them to act. In its broadest sense it

encompasses all selling activities, personal selling sales promotion and publicity. A

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

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

will have been in vain.

Too many consumers, promotion and selling are synonymous with marketing, but

promotion certainly represents a large part of the marketing effort, but if it is of course

only a part of the marketing mix. The way various element of marketing mix come

together depends upon the marketing objective of the organization and therefore

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

rate of promotion in the marketing

mix depends upon the role of the other element of the marketing mix.

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

time to time, they do advertising through media regarding the quantity, quality, place andprice of Coal available for sale. The different distribution medium is also notified to the

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

from the right place and on right price according to

the equipment.

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

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

auction held four times in a month & Forward e-auction held quarterly for long term

requirement of the customer. Company registered in MSTC site according to term and

condition. After e-auction date the product dispatch to their customer. Seven days

before buyers have to pay money for the e- auction.


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MARKETING OF COAL BY RAIL :VALUE ADDITION BY

CUSTOMER MANAGEMERNT

1.0 Any coal traffic that has been lost to the railways has been due to

depletion of stocks of better quality coals in the country, and not due to anyfailure on Railways part. There is no case, therefore, for recovering lost coal traffic

as such.

1.2 This is, however, not to say that Railways are able to carry all the coal traffic thatthey are offered. Coal loading is subject to strong seasonal fluctuations, withinadequate coal traffic offering from May to October, and more than adequate

traffic offering thereafter, which the Railways find hard to pick up. Suchfluctuation has been a yearly phenomenon. Hence, instead of worrying over so-called lost-traffic,Railways should concentrate on lifting the traffic on offerthat is expected to be almost double its current volume.

1.3 Railways may take the following steps to handle the traffic that will be onoffer:

(a) Improved Wagon Design and Better Load ability:

There is urgent need to increase the carrying capacity of wagons and improve tare

to payload ratio, so that more quantity of coal may be carried by each trainload..Action has been initiated in this regard by Railway Board, and RDSO in designing

a 25t axle load wagon for carrying coal and iron ore upto a gross load of 100

tonnes. IR has also taken a decision to adopt 32.5t axle load wagons for carrying

gross load of upto130 tonnes per wagon on the proposed DFCs. The current axleload on IR is 20.32 t, for carrying gross load upto 81.28 tonnes.

It is of utmost importance that IRs efforts in improving the carrying capacity of

wagons is suitably speeded up. Needless to say, along with improved carrying

capacity of wagons, there is need to improve other infrastructure like track andmotive power. But, wagons with much better carrying capacity is the key. It isimportant to vastly improve productivity of railway wagons from what they are

today.


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(b) Better Terminal Management:

Along with quicker transit time that the DFCs are expected to ensure, Railways

have to vastly improve terminal management. Coal companies have to be

persuaded to develop terminal facilities commensurate with loading potential.

Coal sidings loading six to seven rakes per day would be well-advised toinstall rapid loading systems, as at Manuguru in Singereni Colliery Company

Ltd, capable of loading a full rake in an hour and half. Similarly, unloading

terminals will have to be vastly improved, especially in the new super and

mega thermal power stations coming up., so that loaded wagons are released

quickly and the wagons given back to the Railways expeditiously. This will

need setting up of this requisite infrastructure by these customers at the

unloading terminals.

(c) Terminal Incentives-cum-Engine on Load Scheme(TIELS) :

This is an excellent scheme which, introduced by the railways recently,, will vastlyimprove in productivity of railway wagons, if seriously implemented by the zonal

railways. This system allows engines to remain attached with the wagons when

the process of loading is going on, instead of detaching it, and coming back later to

collect the rake when the loading is complete. Serious implementation of this

scheme, which envisages giving a large number of incentives to customers

participating in the scheme, may result in very handsome servings, as a recent

study by RITES has shown.

(d) Contract Marketing:

This concept implies a contractual agreement between the Railways and its

client pertaining to offering a certain volume of traffic by the customer, and

supply of number of rakes, schedules of supply and target delivery time by the

Railways. There are penalties for failure to meet obligations on both sides.

East Central Railway (ECR), Hajipur, has recently concluded such a

contract with Rose Power Supply Company in UP, which may be a model for

other zonal railways to follow.

(e) Wagon Investment Scheme:

This is a scheme designed by the Railways which has so far received an

enthusiastic response. Under this scheme, whenever a customer procures

railway wagons for movement of raw materials as well as finished products,the railways, in return, commit to supply a guaranteed number of rakes per

month for every rake procured, besides giving freight rebate of 10 percent over

7 to 15 years, depending on the type of the wagon procured. There is need to

persuade more and more customers to adopt the scheme. It is seen from the

above that Railways have initiated many actions to handle the higher volumes

of coal traffic that will be an offer. There is need to pursue all these initiatives .


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DATA ANALYSISAND

INERPRETATION


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1)How would you rate the central coal field ltd as a company?

Good Bad Very Good

OBECTIVE-The objective of the question is to find about the image of the company and the

brand equity in the minds of the customers.

INTERPRETATION- The survey finds out that the company has a good image and is

respected by the customers.

80%

0%20%

How would you rate the central coal field ltd as

a company?

Good Bad Very Good

OPTIONS FREQUENCY PERCENTAGE (%)

Good 16 80%

Bad 0 0%

Very good 4 20%

Total 20 100%


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2) What is your view about the product of the company that is coal?

OBECTIVE-The objective of the question is to find the perception of the product of the

company that is coal.


Satisfactory 5 25%

good 10 50%

Very good 5 25%

Bad 0 0%

Total 20 100%

INTERPRETATION- The customers regard the product as a good product. The quality is

product is appreciated by the customers.

25%

50%

25%

0%

What is your view about the product of the company

that is coal?

satisfactory good Very good bad


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3) What do you think about the government pricing policy of the central

coalfield ltd?

OBECTIVE- The objective of the question is to find if the price of the coal set by

the government is acceptable to them and if they are ok with it.


Good 16 80%

Bad 4 20%

Total 20 100%

INTERPRETATION- Most of the customers believe that the pricing policy of the

government is good though a small percentage believe that is it is not good.

80%

20%

What do you think about the government pricing

policy of the central coalfield ltd?

Good bad


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4) What do you think about the promotion policy of the company?

OBECTIVE- The objective of the question is to find if the customers are happy with the

promotional activities of the government.

OPTIONS FREQUENCY PERCENTAGE(%)

Satisfactory 8 40%

Good 10 50%

Bad 2 10%

Total 20 100%

INTERPRETATION- Most of the customers believe that promotional activities of the

government is good but a small percentage think that its not ok.

40%

50%

10%

What do you think about the promotion policy of the

company?

satisfactory good bad


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5) What is your view about the new coal distribution policy that is NCDP

of the company?

OBECTIVE- The objective of the question is to find if the new coal distribution policy

proposed by the government in the year 2012 is acceptable to them


Good 16 80%

Bad 4 20%

Total 20 100%

INTERPRETATION- Majority agree with the NCDP while a small percentage of

customers dont appreciate it.

80%

20%

What is your view about the new coal distribution

policy that is NCDP of the company?

good bad


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6) Is Eauction of coal is a helpful tool for the consumer?

OBECTIVE- The objective of the question is to find the effectiveness of the new auction

policy of the company


Yes 18 90%

No 2 10%

Total 20 100%

INTERPRETATION- The survey finds out that the customers thinks that E- auction has

helped them in a big way.

90%

10%

Is Eauction of coal is a helpful tool for the

consumer?

yes no


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7) How E-auction of coal helps you?

OBECTIVE- The objective of the question is to find in what way the new auction policy

helps the company.

OPTIONS FREQUENCY PERCENTAGE(%)

Easy access 8 40%

Time efficient 4 20%

Transparent process 8 40%

Total 20 100%

INTERPRETATION- The survey finds out that E-auction has helped them in more than

one way.They appreciate the difference made by the E-auction .

40%

20%

40%

How E-auction of coal helps you?

easy access Time efficient Transparent process


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8) What do you think about the logistics of the company?

OBECTIVE- The objective of the question is to find what customer thinks about the logistic

of the company. Is it effective or it needs some improvement?


Satisfactory 10 50%

Good 6 30%

Bad 4 20%

Total 20 100%

INTERPRETATION- The customer believe that the logistics of the company is generally

good.

50%

30%

20%

What do you think about the logistics of the

company?

satisfactory good bad


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9) In which aspect would you like to see change in the company?

OBECTIVE- The objective of the question is to find out changes in marketing mix that the

customer thinks should be made by the company.


Product 2 10%

Price 4 20%

Place 6 30%

Promotion 8 40%

Total 20 100%

INTERPRETATION-The majority of the customers want some improvement in promotion

and place aspect of marketing mix of the company.

10%

20%

30%

40%

In which aspect would you like to see change in

the company?

product price place promotion


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10) Are you a satisfied customer in the end?

OBECTIVE- The objective of the question is to find whether the customers are satisfied after

doing business with the company


Yes 18 90%

No 2 10%

Total 20 100%

INTERPRETATION-The majority of the customers that is as high as 90 % customers are

satisfied with the company and would always want to do business with the company.

90%

10%

Are you a satisfied customer in the end?yes no


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CONCLUSION

In our research we have found out that though the marketing mix aspect of the company is good

and is improving year on year basis but there is always a need for more and more improvement.

If we try to find in which area the customers expects improvements the most, it would be place

and promotion aspects of the marketing mix. Though these aspects are good but we can improve

it more for good. These improvements can mainly be brought under the promotional activities of

the company along with the improved logistics of the company. The E-auction policy has

worked wonder for the customers and we can improve it more and more by the making it more

efficient for the customers. The Coal distribution Policy is very effective and auction is very

interesting for the buyers. The company also takes positive decision that it not involves in serviceto the buyers like transport, material handling, and logistics supply chain etc. company gives time

to receive the coal within 45 days.


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LIMITATIONS

Small survey sample size

Limited time period

No access of company documents


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RECOMMENDATIONS

Coal India Ltd resurrection and turnaround there has been revelation of some of the techniquesused by the company. A daunting task of keeping the companys book in green has been made

over several years. The mining giant has posted 68% increase in the profit for half year ended

September 2011. We try to understand how a company which is a PSU (A Maharatna enterprise)

turned its fortunes around in a matter of years. This is due to E-Auction

Interest from Bank Account Deposits

Reducing Head Count

In Coal India case, this is clearly indicated, they are able to make huge money by e auction

since there is no competition and demand of coal is such that its commanding that premiumprice. But this is not the way to improve companys health. They need to look at selling off huge

stocks of coal in their stores at the earliest and also they need to look towards increasing

efficiency plus increasing production. This is a tough problem for a PSU to crack and thats the

reason as soon as competition hits the door, they will be first to fold

Technology and Outsourcing

This is an amazing story highlighting what technology can do to businesses. E-auction brings in

huge amount of transparency into transactions and brings down inefficiencies in a tremendous

way. Besides that, outsourcing deals bring in efficiency at the operational fronts. Still thecompanys comment is that stocks are getting piled up because of evacuation inefficiency which

is why they do not want to increase coal production further.

Improved logistics

I believe that a lot of supply problems can be addressed through improved logistics and higherallocation to efficient plants. There are multiple options, based on the current rules/policies and

aided by the new FSA directive that stipulates a minimum supply of 80 per cent. These include

economical coal transportation, higher allocation to efficient plants and price pooling amongsimilar grade users. These steps would translate into savings from rail freight and economies ofscale, which would help reduce the impact from inevitable coal imports.


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APPENDIX

Dear Sir/Madam

I am SAURABH PRATAP pursuing my PGDM from INDIRA SCHOOL OF BUSINESS

STUDIES, PUNE. I am doing my internship from Central Coalfields limited (CCL), CoalIndia Ltd (CIL), Ranchi, Jharkhand. My project title isMarketing of Coal. I request you

to kindly give your valuable opinion for the questionnaire related to the project.

Please fill up the following details about yourself:

Designation/Section

Age (in years). .

Work experience (in years)..

QUESTIONNAIRE

1) How would you rate the central coal field ltd as a company?

Good Bad Very Good

2) What is your view about the product of the company that is coal?

Satisfactory Good Very Good Bad

3) What do you think about the government pricing policy of the central coalfield ltd?

Good Bad

4) What do you think about the promotion policy of the company?

Satisfactory Good Bad

5) What is your view about the new coal distribution policy that is NCDP of the

company?

Good Bad

6) Is Eauction of coal is a helpful tool for the consumer?

Yes No

7) How E-auction of coal helps you?

Easy access Time efficient Transparent Process


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8) What do you think about the logistics of the com

4company overview

Documents