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.
Used in industrial furnaces as well as for domestic purposes
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.
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 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.
Used in industrial furnaces as well as for domestic purposes
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.
OPTIONS FREQUENCY PERCENTAGE (%)
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.
OPTIONS FREQUENCY PERCENTAGE (%)
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
OPTIONS FREQUENCY PERCENTAGE (%)
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
OPTIONS FREQUENCY PERCENTAGE (%)
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?
OPTIONS FREQUENCY PERCENTAGE (%)
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.
OPTIONS FREQUENCY PERCENTAGE (%)
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
OPTIONS FREQUENCY PERCENTAGE (%)
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
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