SUMMER TRAINING REPORT ON

STUDY OF THE PRODUCTION AND DISTRIBUTION STRATEGY OF COAL

ForSOUTH EASTERN COALFIELDS

LIMITED

By MAYURI CHANDRA

179

In Partial Fulfillment for the award of the degreePost Graduate Diploma in Management

2010-2012

New Delhi Institute of Management50(B&C), 60, Tughlakabad Institutional Area, New Delhi-

110062E-mail: info@ndimdelhi.org Website: www.ndimdelhi.org

- 1 -

SUMMER TRAINING REPORT ON

STUDY OF THE PRODUCTION AND DISTRIBUTION STRATEGY OF COAL

For

South Eastern Coalfields Limited

Under the supervision

Of

Mr. A.K. Roy

Submitted by- Submitted to-Mayuri Chandra Ms. Anita Saxena179

- 2 -

- 3 -

Acknowledgement

First of all thanks to God for keeping me in good health throughout my

Research work during the scorching summer.

Secondly I would like to thank my Industry mentor, Mr. Arun Kumar

who helped me a lot in the formation of the project. He was a constant

source of inspiration and motivation during all the time of project. His

valuable feedbacks, guidance and motivation helped me to accomplish

my task.

Thirdly I would like to thank my Project Guide, Prof. Saxena on the

completion of my project. She supported and co-operated me throughout

my project and always gave me useful feedback whenever I felt sort of

ideas.

Fourthly I would like to thank the other working staff whose co-operation

in the office as well as in the market was very encouraging and

supportive.

I would like to thank my parent as well for providing me with constant

motivation during my whole project tenure.

Lastly I would like to thank each respondent for the valuable answers for

my project report.

- 4 -

DECLARATION

I, Mayuri Chandra, student of New Delhi Institute of Management batch 2010-2012 declare that every part of the Project Report Sales and Distribution Technique of Different Types of Coal that I have submitted is original.

I was in regular contact with the nominated guide and contacted three times for discussing the project.

Date of the project submission

Faculty’s comments:

Signature of faculty guide

Name

- 5 -

TABLE OF CONTENTS

1. Acknowledgement2. Declaration3. Executive summary4. Introduction to the company

Company overview Important events

5. Research methodology6. Company profile7. Business objectives8. Role of SECL9. Subsidiaries of SECL10.Pioneering contribution11.Hierarchy12.Different areas with its production13.Main functions of SECL14.Present scenario15.Production16.Performance

Actual growth Percentage growth

17.Dispatches and offtakes Sector wise Mode wise

18.Productivity Grade wise State wise

19.Dispatches to consumers20.Marketing policy

Marketing setup of coal Consumers of coal Segmentation of coal market

Core sector

- 6 -

Non core sector Seasonal buyers Domestic buyers

21.Competitors22.Marketing mix

Product Place Price Promotion

23.What’s new?24.E. Marketing of coal25.Coal Videsh26.Coal liquefaction27.Coal Net28.Distribution( methods and problems)29.Problems in transportation of coal30.New coal distribution policy31.Findings32.Conclusion33.Bibliography

- 7 -

Executive SummaryThe research conducted basically focuses on the marketing and

distribution method of coal in India basically Chattisgarh and Madhya

Pradesh. The different types of coal found in various places of India and

the price of those coals. From the data obtained after primary research it

can be concluded that India is one of the leading producer of coal and it

employees lakhs of employee. Coal India doesn’t have any competitor as

it is the only coal producing unit and it comes under the supervision of

Government of India.

The company has distinguished business objectives. Chattisgarh and

Madhya Pradesh have different coal producing areas which have different

levels of production, and these differences come due to the geological

difference in both states.

The production and productivity has been studied on the basis of grade

and state. Dispatches on the basis of sector and mode of transportation. I

have also mentioned the marketing setup of coal and the segmentation of

coal market.

The new initiatives which have been undertaken by the company like e

marketing, coal videsh, coal liquefaction, coal net has also been

discussed.

- 8 -

The problems which are faced in the transportation of coal and ways to

overcome it is also discussed in this project. The new coal distribution

policy is also mentioned.

INTRODUCTION TO THE COMPANY

- 9 -

COMPANY OVERVIEW

Coal India limited(CIL)- A schedule ‘A’- MAHARATNA Public Sector Undertaking under the Ministry of Coal, Government of India, is the single largest coal producing company in the world and the largest corporate employer with approx. 3.8 lakh employees, contributing around 85% of the total production in India. The company produces non coking coal and coking coal of various grades for diverse application. It operates 471 mines including 163 open cast mines, 273 underground mines and 35 mixed mines (includes both open cast and underground mines). in 21 major coalfields across eight states in India (West Bengal, Jharkhand, Orissa, Madhya Pradesh, Maharashtra, Chattisgarh, Uttar Pradesh and Assam).In the Financial year 2010-2011, Coal India produced 440 tonnes of coal and has a plan to increase its production up to 520 million tones by the end of 2011-2012. 74% of the total coal production of CIL caters to 72 out of 75 thermal power station of the country. The company is also undertaking many mining operations abroad and joint ventures. It also operates 17 coal beneficiation facilities with an aggregate designed feedstock capacity of 39.40 million tons per annum. It intends to develop an additional 20 coal beneficiation facilities with an aggregate additional proposed feedstock capacity of 111.10 million tons per annum. Besides this, it provides 85 hospitals and 424 dispensaries. Coal India has following subsidiaries- Eastern Coalfields Limited(ECL), Bharat Coking Coal Limited(BCCL), Central Coalfields Limited(CCL), Westen Coalfields Limited (WCL),South Eastern Coalfields Limited(SECL), Northern Coalfields Limited (NCL), Mahanadi Coalfields Limited(MCL) and Coal Mine Planning and Design Institute Limited(CMPDIL). All the

- 10 -

subsidiaries produce coal except CMPDIL. Coal Mine Planning and Design Institute Limited is meant only for exploring coal. All the above subsidiaries are located in different part of the country.The Indian Institute of Coal Management (IICM) operates under CIL and imparts multi disciplinary management development programs to the executives.Coal India's major consumers are the power and steel sectors. Others include cement, fertiliser, brick kilns etc.

OBJECTIVES FOR THE STUDY

To know and understand the present sales and marketing system of South Eastern Coalfield Limited (SECL), Bilaspur.

To know the present scenario of South Eastern Coalfield Limited.

To know the marketing and distribution strategies (method &problem) in South Eastern Coalfield Limited (SECL)

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.               

- 11 -

IMPORTANT EVENTS

1743 Commercial production of coal by east India company for the manufacture of arms and ammunition

. 1815 Opening of the first shaft mine near Raniganj town.

1843 MIS Carr. Tagore and other company amalgamated into the East Bengal Company Ltd. This was the first joint stock company in India.

1853 Commencement of Railways service in India.

1855 Opening up of railways from Culcutta to Raniganj, the the turning point of Coal industry in India.

1862 Coal mine began in central province Jharia Coalfield by the Government of India undertaking 1st phase of Coal nationalization.

1965 Formation of National Coal Development Corporation Ltd.

1971 Coking Coal Nationalization.

1973 Non-Coking Coal Nationalization.

1975 Establishment of Coal India Ltd. (CIL)

1985 Northern Coalfield Limited (NCL) and south eastern Coalfield Limited (SECL) carved out of CCL and WCL.

- 12 -

1992 Mahanadi Coalfield Limited (MCL) formed out of SECL Tomanage the Talcher and IB Valley Coalfield in Orissa.

2000 De- regulation of Coal pricing and distribution of coal.

2007 Coal India & five of its subsidiaries viz, NCL, CCL, SECL, MCL, WCL conferred Mini Ratna status.    

RESEARCH MEHODOLOGY

- 13 -

SCOPE OF THE RESEARCH

The research work covers the whole of Korba Area in Chattisgarh, with all the areas and sub areas. The respondents include the employees of Coal India- both skilled and semi skilled, the consumers, the competitors. Mostly the data has been collected from the employees of South Eastern Coalfields limited.

RESEARCH METHODOLOGY

This research was conducted to find out the selling and distribution strategy of South Eastern Coalfields Limited and its market share, also found out the state wise, district wise production of the coalfield, also found the modes of transport and the difficulties faced by them.

TYPE OF RESEARCH

The nature of Research work conducted is Descriptive, as major part constitutes survey analysis. The following research work is used in estimating the monthly sales of different Engine Oil in a month.

- 14 -

Some part of the research is Exploratory as well. Some secondary data is also used in order to know the number of mines- underground, overcast etc.

SOURCE OF INFORMATION

The information is based on:

Primary data: primary data was gathered through personal interviews of SECL officials.

Secondary data: secondary data were collected from the various published report, circulars, journals and books relating to coal and publication of different institutions including foreign magazines on the topic.

SAMPLING TECHNIQUE

Judgmental or purposive sampling was used for the purpose. This is because the primary consideration in purposive sampling is the judgment of the researcher as to who can provide the best information to achieve the objective of the study.During the research those respondent were only selected who in researcher’s opinion are likely to have the required information and willing to share it.

- 15 -

SAMPLE SIZE

The following group of people were kept under observation to find out the datas:

EMPLOYEES Executives- 10 Skilled labour- 20 Semi skilled labour- 20

Constraints in data collections:

Different coal consumers belonging to public enterprises and private industries could not be interviewed due to shortage of time.

Most of the executives of SECL, consumers and railway officers are reluctant to give information due to their internal policy of maintaining secrecy.

- 16 -

COMPANY PROFILE

VISION Being the domestic leader, SECL strives to be leading international player in energy sector through best practices from mine to market.

MISSION The mission of Coal India is to produce and market the planned quantity of coal efficiently and economically with due respect to safety, conservation and quantity.

PROFILE Coal India limited is the 3rd largest coal producing company in the world having about 5 lakh employee, with the headquarter in Kolkata is a holding company under the Ministry of Coal, Govt. of India. For the entire coal industry in the country barring the coal mine in A.P( which comes under the jurisdiction of Singreni Collieries Company limited and

- 17 -

govt. of A.P) and the captive mines of TISCO, ISSCO and DVC. It was formed as a public sector undertaking in Nov. 1975, for recognizing the nationalized coal mines and ensuring integrated development, the prime source of energy.Coal India presently contributes 90% of the total coal production companies- ECL, BCCL, NCL, WCL, MCL, SECL and CMPDIL for the mine planning, designing and engineering consultancy services . The mine of North Eastern Coalfields( Assam and Meghalaya) and Dankuni coal company(DCC) in West Bengal operates directly under Coal India. Coal India currently 465 and 19 washier spread over and 8 state to produce and beneficiate coal for meeting the demand of consumer all over the country. The range of products are: raw coal(coking and non coking), washed coal, Middling, soft coke and hard coke, coal tar, coal gas, coal chemicals etc.

BUSINESS OBJECTIVES

To carry on business of coal mining.

Acquisition of coal mining.

Production sale and disposal of coal and its bi- products.

Coal benefacation, manufacturing coke, bi- product of coal and other business.

Reorganization and reconstruction of coal mines taken over by government.

Policy formulation and advisory functions.

To act as an entrepreneur on behalf of state in respect of coal industry.

- 18 -

To finance replacement expenditure.

To develop technical know- how.

Exploration and prospecting.

To manufacture and sell coal as a patent fuel.

To act as a colliery and mine proprietors, coke manufactures in all their respective branches.

ROLE OF SECL

To implement the policy and program laid down by the govt. of India. CIL ensures working in accordance with the guidelines and directions issued by them from time to time.

To keep them informed of the program with regard to implementation of their policies and progress in accordance with the guideline and direction issued by them.

To plan and carryout all operations in such a manner that there is no risk of loss, injury or damage to the health of workman.

To adopt techniques and methods of working such that loss of coal reserves by ways similar to other reasons and blockage of reserved in barriers etc. in the east.

To draw annual plans for production, preparation and dispatch of coal connect activities keeping in priority wise demand.

To draw out inputs of various equipments that is plants and machinery, stores and spares land and building etc.

- 19 -

To keep down cost in all possible ways so as to get maximum profit.

To take care of housing, water supply, recreation, education, medical and other facilities for the social security of employees and to extend it as reasonable and practicable.

To maintain harmonious industrial relation. To arrange for necessary fund and utilize that in the most

advantageous manner.

SUBSIDIARIES OF COAL INDIA LIMITED

s.no NAME OF THE COMPANY H.Q STATE1. Eastern coalfields limited(ECL) Sanctoria West Bengal

2. Western coalfields limited(WCL) Nagpur Maharashtra

3. Bharat coking coal limited(BCCL) Dhanbad Jharkhand

4. Central coalfield limited(CCL) Ranchi Jharkhand

- 20 -

5. South eastern coalfields limited(SECL)

Bilaspur Chattisgarh

6. Northern coalfield limited(NCL) Singrauli Madhya Pradesh

7. Mahanadi coalfield limited(MCL) Sambalpur Orissa

8. Central mines planning and design limited(CMPDIL)

Ranchi Jharkhand

- 21 -

- 22 -

PIONEERING CONTRIBUTION

South Eastern Coalfields Limited has made pioneering contribution to the coal industry in the following areas:

Detail contribution to establish minable coal reserve.

Planned exploration coal reserve mainly in outlying areas.

Introduction of scientific method of mining through collaboration with foreign countries.

Opening of large capacity underground and open cast mines.

Training and skill development of large cadre of engineering, technicians and executives.

Evolution of modern management techniques.

Welfare of employees.

Community development and tribal welfare.

Resolving intra- company problem.

- 23 -

SOUTH EASTERN COALFIELDS LIMITED

South Eastern Coalfields Limited is the largest coal producing company in the country. It is one of the eight subsidiaries of Coal India Limited (A Govt. of India Undertaking) under the Ministry of Coal . The company was adjudged the best PSU in the country for 97-98 and was awarded Jawaharlal Nehru Memorial National Award for pollution control and energy conservation in the year 2003, Excellence award in 2004, 2006 and 2008, National safety award from Hon'ble President of India in 2004, 2005 and 2006. SECL has been awarded " Mini Ratna" Status by Govt of India in 2007 . In year 2009-10,total  coal  production  by SECL was 108.01 million tonnes from open cast and underground mines which is highest among all subsidiaries of Coal India Ltd and among all coal producing companies in India. In the year 2009-10 out of total coal production of 431.27 million tonnes produced by Coal India Ltd.,   total  coal  production  by SECL was 108.01 million tonnes  SECL has been making profits since its inception.

South Eastern Coalfields Limited is located in Madhya Pradesh and Chattisgarh having its head office at Bilaspur in Chattisgarh. The company is headed by Chairman- cum- Managing Director.

Chief Managing Director Director Technical (operations) Director Technical (plant and production) Director (personnel) Director (finance) Executive Director (vigilance)

All the directors have functional powers of the department under them. Sales and marketing department comes under Director (operations) at SECL Headquarter.

- 24 -

HIERARCHY

- 25 -

There are thirteen areas under SECL headed by the Chief General Manager:-

1. KORBA AREA2. KUSMUNDA AREA3. GEVRA AREA4. DIPKA AREA5. RAIGARH AREA6. HASDEO AREA7. CHIRIMIRI AREA8. JAMUNA-KOTMA AREA9. SOHAGPUR AREA10. JOHILLA AREA11. BAIKUNTHPUR AREA12. BISRAMPUR AREA13. BHATGAON AREA

The coal deposits of SECL occur in five districts i.e. Bilaspur, Korba, Raigarh, Surguja & Korea in Chattisgarh and three districts Shahdol, Umaria, Anuppur district in Madhya Pradesh. This occurs in the great Son Mahanadi master basin.SECL has 92 Mines. Total UG Mines are 70 and Total OC mines are 21.There is 1 mixed mine.There are 42 UG Mines ,13 OC Mines , 1 Mixed Mines in Chhattisgarh and 28 UG Mines , 8 OC Mines in Madhya Pradesh.

- 26 -

SECL has four major coalfields with the following geological reserves

Major Coalfields Coal Mining Area 

(Sq.KM)

Geological Reserves 

(Mil Tonnes)

Depth (metres)

 Korba Central IndiaMand- RaigarhRamkola-Tatapani

530.05345.0520.0260.0

10115.2115613.9819106.041616.79

0-6000-12000-12000-600

SECL 6655.0 46452.02 0-1200

KORBA COALFIELDSKorba coalfield is located in Korba district of Chhattisgarh and covers an area of about 530 Sq. Km. As per GSI a total of 10115.21 Mt. coal reserves available in Korba coalfield.The deposits are restricted into two distinct zones:

Thick seam/quarrible power grade zone comprising of grade E, F and G having reserves of approx. 9068 mt.

Thin seam/ underground superior grade zone comprising of grade B and D having reserves of approx. 1007 mt.

CENTRAL INDIA COALFIELDS

- 27 -

Extends from Bishrampur Coalfields in the east to Umaria- Korar coalfields in west and located 4 districts Sarguja and Korea in Chattisgarh and Sahdol and Umaria in Eastern Madhya Pradesh.

This includes 14 coalfields namely Korar, Umaria, Johilla, Sohagpur, Jhilimili, Chirimiri, Sendurgarh, Korea-garh, Damhamunda, Panch-bahini, Hasdeo-Arand, Lakhanpur and Bishrampur. Out of the above, 3 coalfields namely Korar, Koreagarh and Damhamunda are of only geological importance and do not have any potential coal seams.

2 coalfields i.e. Panchbahini and Hasdeo-Arand are virgin and identified as captive.

Covers an area of about 5345 sq.km. comprising of mostly B& C grade of coal with geological reserves of15613.98 mt. The deposits are at the depth of 0-1200 meters & therefore extraction is mainly amenable to underground mining except a few blocks in eastern part of these coalfields which have opencast potential. 

MAND- RAIGARH COALFIELDS

Situated in Raigarh district of Chattisgarh. Covers an area of 520 sq. km. Comprising of grades A to G having reserves of 19106.04 Mt. Large potential for power grade coal and can be exploited

through open cast mining. Infrastructural facilities are being established. Private/ captive mining potential. Gare block has been identified

as captive mine block.

RAMKOLA- TATAPANI COALFIELDS

Located in Sarguja district of Chattisgarh.

- 28 -

Covers an area of 260 sq. km. Exploitation yet to be taken up. Comprising of grades A to G having reserves of 1616.79 mt. Infrastructural facilities for coal evacuation yet to be established.

SOUTH EASTERN COALFIELDS LIMITED- KORBA AREA

S.E.C.L. Mines, Korba provides employment to 11,400 Officers and Staff and the annual production of coal is 3 crores MT. in Korba. S.E.C.L. Mines in Korba are rich in coal deposits; as a result they are called as the land of Black Diamonds. A geographical survey was conducted during the British rule and deduced that the area was rich in coal deposits. The production of coal was initiated in the year 1950. 

Asia's largest open cast coalmine is the Gevra Mines located in this region. The Government earns a huge amount in the form of royalty from these mines, which is approximately Rs.200 crores annually. The Indian Railway on the other hand levies Freight Charges for carrying the coal and earns about Rs.3 crores each day. South Eastern Coal Fields Limited has 12 mines, of which 7 are underground coalmines and 5 are open cast mines. The coal deposits cover an area of 155 sq. km. The coal that is available in this region is composed of 11.2 to 31.61 % ash, 27.9 to 39.27 % volatile matter, 4.5 to 7.47 % moisture, and 34.1 to 47.71 % fixed carbon.

The following Thermal Power Stations at Korba use the coal that is produced in the mines of South Eastern Coal Fields Limited in Korba:

Korba Super Thermal Power Station (N.T.P.C.) Korba Thermal Power Station, Chhattisgarh State Electricity

Board, Korba (East) Balco Captive Power Plant (N.T.P.C.) Hasdeo Thermal Power Project, Chhattisgarh State Electricity

Board, Korba (West)

- 29 -

Various other states like Gujrat, Maharastra and Haryana uses the coal produced at S.E.C.L. Mines, Korba. The names of the Thermal Power Stations are as follows:

K.P.E.B. (H.S.E.B. Khaparkheda), Haryana G.E.V.K.A., Gujrat Maharastra Electric house Maharastra B.R.D. (Sunflame Bhandara Road) Gujrat Electricity board Mumbai Electricity Board H.S.E.R. (Bhusawal), Maharastra H.S.E.B. (Nasik), Maharastra Gujrat Electric House H.S.E.B. (Kurdi), Haryana

MAIN FUNCTIONS OF SOUTH EASTERN COALFIELDS LIMITED

To act towards achieving co-operative objectives and approve review strategies for achieving these objectives.

To establish policies regarding long term planning, conservation, research and development, finance, recruitment, training, safety industrial relation, wages, marketing, purchase and stores.

To set target and monitor them. To approve budgets, determine standard cost and retention price

and evaluate performance. To co-ordinate among the subsidiary company. To lay down overall policy regarding coal distribution. To establish board linkage from consumer to company. To maintain liaison with major consumers. To make on behalf of subsidiaries, such as purchase of plants,

equipment of high unit and value in short supply. All imports and exports to be routed to CIL, and to operate a

common cadre for CIL and its subsidiaries. Under this recruitment of personnel at the level of executives would be done by CIL alone. CIL has to arrange training and to allot them to

- 30 -

companies. The subsidiary companies are responsible to deliver coal, maintain control and carry out after sale service, once the distribution and board linkage are decided. Subsidiary companies are also responsible to realize sale proceeds of coal bills. Coal India will be involved when there are inter company problems requiring common approach to consumer carries etc…

PRODUCTION

A Mini Ratna Company - South Eastern Coalfields Limited has made a record in the year 2009-10    in Production and set an all time highest record in Overall Performance in respect of off-take/despatches, production, wagon loading, quality improvements and optimization of overall  consumers’ satisfaction in terms of meeting their coal requirement.Total Production in the year 2009-10 was 108.01  Million Tonnesagainst the target of 106  Million Tonnes which is 6.78 % more   than in the year 2008-09.

SECL has also set a historical all time high record of despatch by despatching 105.87 Million Tonnes to its various Consumers during the year 2009-10.  This is an all time high record by any subsidiary of Coal India Limited .PRODUCTION AND PRODUCTIVITY FROM 1998- 2010

Production (mill. Tonnes)

Productivity (Output/manshift)

- 31 -

year OC UG Total OC UG Overall

98-99 41.56 16.00 57.56 9.24 0.92 2.64

99-00 42.75 16.01 58.70 9.36 0.93 2.70

00-01 44.57 15.76 60.33 9.96 0.93 2.83

01-02 48.21 15.91 64.12 10.03 0.97 3.0

02-03 50.44 16.16 66.60 10.70 1.01 3.21

03-04 54.65 16.36 71.01 11.25 1.05 3.49

04-05 61.97 16.58 78.55 12.27 1.11 3.95

05-06 66.50 16.52 83.02 12.76 1.12 4.17

06-07 72.30 16.20 88.50 13.27 1.14 4.51

07-08 77.05 16.74 93.79 14.30 1.19 4.83

08-09 83.58 17.57 101.15 15.76 1.26 5.26

09-10 90.18 17.83 108.01 18.89 1.33 5.96

Production for the yr 2006-2010 productivity (output/manshift) In million tones. For the yr 2006-2010

PERFORMANCE(2009-2010)

- 32 -

ITEM ACTUAL % Growth

TOTAL PRODN M.T. 108.01 6.78

O/C PRODN M.T. 90.18 7.90

U/G PRODN M.T. 17.83 1.48

OBR MM3 129.80 21.30

OVERALL OMS Te 5.96 13.31

OC  OMS Te 18.89 19.86

U/G OMS Te 1.33 5.56

COAL OFFTAKE MT 105.89 2.79

WAGON LOADING FWW/DAY 4472 -4.79

SUPPLY TO STEEL PLANT M T 1.50 -0.66

DESPATCHES AND OFF TAKES(2009-2010)

Coal despatches to the consumers during 2009-10 was 105.87 MT.

- 33 -

Off-Take has been 105.89 MT in 2009-10 .Offtake has increased by 2.79 % over last year.

SECTOR WISE DESPATCH(MT) (TOTAL DESPATCHES- 105.87 MT IN 2009-2010)

Power house CPP Unit Cement Steel(blendable) Sponge Fertilizer other

74.26 11.25 4.73 0.15 4.39 0.64 10.45

sectorwise dispatch

MODE WISE DESPATCH(MT) (TOTAL DESPATCH- 105.87MT IN 2009-2010)

RAIL ROAD MGR BELT OTHER(OWN WAGON

40.54 40.43 16.39 5.37 3.14

- 34 -

Mode wise dispatch of coal

GRADE WISE PRODUCTION (2009-2010)GRADE PERCENTAGE

A 2.58

B 9.75

C 9.47

D 4.39

E+F 73.67

SC-II 0.14

- 35 -

GRADEWISE PRODUCTION

STATE WISE PRODUCTION (MT) (2009-2010)

CHATTISGARH MADHYA PRADESH

88.72(87.71%) 12.43 (12.28%)

- 36 -

State wise distribution

DESPATCHES TO CONSUMERS

Among SECL’s major consumers are power house, steel plants, fertilizers industries, cement plants, medium and small industries, bricks

manufacturers and domestic consumers.

Industry Type of coal requiredSteel making Coking and semi coaking coal,

direct feed and washed; blendable coal; low ash %, Assam and Raniganj coal.

Steel making, sponge iron industry Non coking coal of high initial deformation temperature(>1200

degrees celcius)Cokeries/ coke oven plants Coking and semi coking coal

Briquette making/ domestic fuel making

Semi coking coal and non coking coal, middling and rejects of

- 37 -

washeries.Special smokeless fuel (SSF) Semi coking coal and coking

index 8-10

Power sectorNon coking coal; middlings of coking coal washeries; washed

coal of non coking coal washeries.

Cement sector Non coking coal; middlings of coking coal washeries

Glass and potteries Long flame non coking coalCast iron casting Hard coke

Steel casting Non coking coalbricks Non coking coal; middlings of

coking coal washeriesOld boilers Non coking coal; middlings of

coking coal washeries

- 38 -

MARKETING POLICY

- 39 -

MARKETING SETUP OF COAL

Marketing is very important branch of any organization. It plays the dominant role in the strengthening of the organization. In case of coal industry due to monopolistic market scenario, coal marketing was not much a problem in the past. However with the liberalization of the economy and easy availability of imported coal by many consumers, marketing is now playing a very important role in the entire operation activities of South Eastern Coalfields Limited (SECL).

CONSUMERS OF COAL

Coal is a fossil, it is the prime commercial source of energy in India. It contributes to 90% of the total energy consumed and reduced. Coal India is perceived to be synonym of Indian Coal Industry. The observation about the global setting of the coal sector is not fully reluctant in the Indian context. Change in technology and change in mining method have resulted in cost reduction in real term. With no significant breakthrough in tapping non- conventional energy source in foreseeable future and limited petroleum resources, coal continues to be main source of energy.

- 40 -

74.68

2.35

2.54

0.68

3.25

6.769.75

powersteelcementfertilizersponge ironcppothers

The data is given in percentage

SEGMENTATION OF COAL MARKET

In contrast to modern market scenario, coal is the product with difference. This is because after the nationalization of CIL, the customers of coal are widely dispersed all over the country and they are divided on the basis of size, consumption, characteristics, and requirements.The various segment of coal consumers are:

CORE SECTORBulks of coal dispatched to the core sector. The segment consist of bulk consumers, which contribute to the infrastructure development of the country. The customers are power houses, steel plants and few coke ovens. This segments account for 85% of the total consumption.

NON CORE SECTORAfter the core sector, the major consumer of Coal is non-core sector. This segment includes industries like textiles, paper, chemicals, fertilizers, re-factories and engineering. Industries, foundries, glass, ceramic industries etc. this segment consist of nearly 40,000 small industries and medium scale industries having individual consumption of about 1000tonnes to several tones per annum. 

SEASONAL BUYERSThis segment consists of very small number of consumer of Coal in particular season. The segment contributes 6 % of dispatch. Such seasonal consumers are manufactures, tobacco farmers and tea gardeners. 

DOMESTIC SECTOR 

- 41 -

This is very small segment of consumers as compared with the consumption of the other segment. But in the term of number, it has a large number of consumers. This segment consists of more than 6 million households consuming about 5% of the total market. Consumers are mostly located in the states of Bihar, West Bengal, U.P., Delhi, Punjab, Himachal Pradesh and other Northern states. Requirements of this segment are totally met through intermediaries and other Northern state.

COMPETITORS

The post nationalization years saw an increasing coal demand which creates monopoly in coal. The managerial attitudes with ownership, with a demand far exceeding the level of production of CIL and its subsidiary organization, performance within coal industry has also declined. There was little besides distribution of coal that could be called true marketing.

At present the coal industry is not under a major threat competition even with liberalization of different sectors. It is expected that carrying on with the things as they are today. The coal industry shall remain in the monopoly position for much as a decade. It is after this, that govt. policy of liberalization shall be felt in its fullest strength. This is because, by this period, the private mines shall have positioned themselves in the open market. Liberalization in our country is still in initial phase.

- 42 -

MARKETING MIX

- 43 -

PRODUCT

South Eastern Coalfields Limited dealing with coal as a product is the second largest coal provider in the world. It provides many types of coal according to buyer’s need.

There are two types of coal, the company generally deals with:

Coking coal Non- coking coal

Coking coalThe coal when heated in the absence of air, free from volatiles with strong and porous mass is called coking coal. The features are as follows:

It is used for hard coke manufacturing. It is mainly used by steel companies and metallurgical industries. The coal has coking properties.

Non- coking coalThe coal which does not have coking properties is non coking coal. The features are as follows:

It is mainly used for power generation by thermal grade companies.

- 44 -

It is used by cement, fertilizers, glass, ceramic, paper, chemical, bricks manufacturing and other heating purpose.

The other types of coal which the company deals with are as follows:

Washed coal Power coal Slurry coal Reject coal Soft coal Hard coal

Washed coalSuch coal which have undergone process of coal washing causing value addition of coal by way of reduction in ash percentage.

Power coalPower coals are those coal which the company purchase for its own use, i.e. production of power for self use. It is mainly used by steel plants.

Slurry coalSlurry is fine particle of coal which is generally used by brick making companies.

Reject coalThose coal which have more quantity of ash.

- 45 -

Soft coalSoft coals are those which come from Dankuni Coal Complex using low temperature carbonization of non coking coal in vertical resorts. These are used in furnace plant, boilers industrial plants as well as power houses, CIL industries, pharmaceutical company etc.

Hard coalHard coal are formed from semi coking through the process of carbonization. It is mainly used in metallurgical industries and also industrial plants.

On the basis of size, coal is of two types:

Steam form:Steam forms are those which are more than 250mm in size.

Slack form Slack forms are those form which are less than 250 mm in size.

PLACE

- 46 -

PRICE

Domestic price fixation

- 47 -

Government of India deregulated the price of non- coking coal of grades A, B and C. Coking coal and semi/ weekly coking coal on 22.03.1996. Subsequently, on 12.03.1997 government of India deregulated the price of no- coking coal of grade D, hard coke and soft coke and also allowed Coal India Ltd. To fix coal price of grade E, F and G till Jan 2000 once in every 6 months updating cost indices as per escalation formula contained in the 1987 report of the bureau of industrial cost and price. With effect from 01.01.2000, 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 12.12.2009.

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 and weak coking coal, direct feed coal, Assam coal for various subsidiaries of CIL are given below:

Basic price of run of mine non- long- flame non- coking coal

Field/coECL(for 12 units vide annex II)

A3690

B3590

C1290

D1040

E780

F610

G430

ECL/ mugmaECL/ Rajmahal

3690-

3590-

1500-

1240-

9901020

740870

480700

BCCL 3690 3590 1250 1040 830 660 470

CCL 3690 3590 1220 1000 790 630 450

NCL 3690 3590 1100 920 740 580 430

SECL 3690 3590 1050 880 730 570 430

MCL 3690 3590 1050 880 730 570 430

PROMOTION

- 48 -

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 up on 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 and price 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 buyer’s 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 buyer shave to pay money for the e- auction.                

- 49 -

WHAT’S NEW

New Initiative taken by Coal India Ltd.

CIL, with an impressive track record in meeting the energy needs by registering a growth in production in excess of 5 %annually over the years, is aiming at playing a more purposeful role in establishing itself as prime supplier of energy to the nation. In this respect, CIL has not restricted itself within the conventional gamut of coal mining, but also exploring the possibility of expanding its horizon in harnessing the potential of non-conventional energy source as also to expand its pressure beyond the boundaries of country. The various initiatives already taken in this direction are summarized below:

Coal bed methane (CBM)CIL is involved in 2 CBM projects.UNDP Demonstration project:A demonstration project named Coal Bed Methane recovery &commercial utilization has been taken by the Govt. of India in collaboration with Unites Nation Development Program & Global Environment Facility. The project has been sanctioned by Govt. of India during Sept, 1999 and the project is now under implementation at sudamdih and Moonidih mines at BCCL. The present technical assistance project draws on the recommendation put forth in India’s ninth Five Year Plan recommending the development of new source of energy. The UNDP-GEF project will support technical assistance and in country capacity building in areas of methane recovery and use. Through representative demonstration plants, the project will introduce advances techniques of gas resources assessment and recovery and also utilization method relevant for India Coal mining conditions. Drilling is in progress, first bore hole drilled up to 1059.30.

CIL & ONCG JVGovt. of India through has allotted 2 blocks. One in Raniganj and Other in Jharia Coalfield approx. of 356 and 85 sq. km. respectively on nomination basis to the consortium of CIL and ONGC. Work is in progress. Petroleum Exploration license for both the block has been obtained from respective state Govt.

- 50 -

At Jharia, 8 no. of slim hole drilling from GIL end is complete since30.12.2004 by development of 3 Rigs.A total of 8703.65 MT’s have been drilled since commencement. CBM related test has been carried out.At Raniganj CBM block, drilling started on 26.05.2006 by developing 2 drilling rings, one of CMPDI and one of NEC. A total of 982.50 MT’s have been drilled since commencement.

- 51 -

E- Marketing of CoalThe sale of Coal through e-auction scheme is considered to be the most rational system of sale of Coal through which it is at the same time objective, equitable, transparent and above all, beneficial to all those users of coal who do not have official channel to purchase coal, either because they were closed down and subsequently revived after fresh effort and require Coal to start their operation.

Objectives of scheme To provide equal opportunities to all intending buyers for purchase

of Coal / Coal products through single window service. To provide wider choice of source, grade/ size, mode for all type

of customers including small customers / traders. To facilitate creation of large no. of outlets across the country for

all customers through customer-friendly system of sale of coal / coal products making use of modern technology.

To evolve a market ±driven Coal pricing mechanism through inter play of market forces of demand and supply by shifting away from administrative price regime. Buyer can get access to coal at self determined prices.

To provide a legitimate channel of supply of Coal to an ever growing no. of new industries, non-linked consumer with snapped/ lapsed linkage, customers requiring Coal above their specified permissible quantities. If any seasonal consumer such as brick manufacturers, SSI & tiny industries, cottage industrial or any other buyers  in distress and also buyers purchasing Coal for resale purpose. Coal India proposes to increase allocation Coal under e-marketing, so that the market mechanization of price determination based on supply and demand is just judiciously established.

- 52 -

COAL VIDESHIn India, techno-economically recoverable reverse of good quality coking coal and high grade low ash non-coking coal are not adequate to meet indigenous requirement and thus import of such coal has been resorted to bridge the gap. Since, demand of coal is increasing at faster rate, it is felt necessary that CIL should venture for coal mining abroad, where such coal is available, to facilitate bridging the gap. With this objective, it has been proposed to form a separate company Coal Videsh. CIL board has approved the proposal which needs approval of the Govt. mean while, a dedicated Coal Videsh department consisting of multidisciplinary team has been opened in CIL. The team has been started visiting South Africa, Mozambique and Zimbabwe to explore strategic business opportunities in these countries. CIL is also actively pursuing business intelligence activities by closely tracking the business opportunities in Australia, Indonesia and Russia.    

- 53 -

Coal liquefaction

Coal India Limited had approached CIL to become a partner in its venture of producing CIL from coal in its Duliajan plant inAssam and requested for supply of about 3.5 mt p.a of coal NEC. CMPDIL has prepared a report on possibilities of producing 3.5 MTPA coal from NEC, GIL and CIL held a meeting to discuss future possibilities on July11, 2005 wherein CIL indicated that the tentative cost of production of CIL obtained from this process is about US $ 35 per barrel which appears to be quite attractive particularly view of bargaining CCL price in international market which has reached up to US $ 65 per barrel. It has decided to form a ³Joint Task Force´ of GIL which would study the CMPDI report for possibility of coal production of 3.5 MT p.a from NEC and examine enhancement of scheduled of production, examine possibility of formation of 2 joint venture, 1 for coal production find other for setting up of Coal Liquefaction plant and its upstream activities.

Underground Coal Gasification (UCG)UCG is the in-situ gasification of coal in the seam. It is achieved by injecting oxidant, gasifying the coal and bringing the product gas has to surface through bore holes grill from the surface. The gas is used for power generation, industrial heating or as chemical feedback. Coal India has given high priority to the issue of UCG. CIL and ONGC are likely to take up jointly a pilot project for establishment UGC technology.A MOU has been signed between CIL & ONGC 3rd Nov, 2005. Further drilling for additional data generation is one of the prospective which is been taken up. Initial work of data exchange, needed for identification of trial site, has already been taken up.

Over ground Coal Gasification (OCG)

- 54 -

Director (planning and business development), GAIL (INDIA) Ltd. director (Technical) Coal India Ltd. on 20th July 2005 in connection with their interest to make a JV with CIL for joint evaluation of work in various Coal sector related potential opportunities. A draft memorandum of corporation (MOC) has been drafted. MOC includes the scope of work for this JV in the field of over ground Coal Gasification, CIL and GAIL have taken up drawing of a road map to accomplish the objective jointly in right earnest.

Power Plant

CIL is also contemplating setting LI of power plant JV. In this connection, CIL is in negotiation, with both NLC & NTPC for power plant in Orissa.

Switchover- categories of Coal from UHF to GCV

Effort are being made to assess the possibility of making the categorization of coal from UHF basis to GCV basis, trial are being conducted at MCL & NCL result of which are yet to be obtained.

- 55 -

COAL NET

Coal India had taken initiative in development and implementation of COAL NET. Application S / w an integrated solution, to bring uniformly across its subsidiary companies and entrusted the activities to IIT Kharagpur in the year 2001. The application s/w has been developed and implemented at CIL and is subsidiary (HQ’s). Necessary LAN has been set up at respective subsidiary (HQ’s) for COAL NET s/w. the same is being upgraded for faster access of application data.

Telecommunication link have been set up over satellite media (VSAT system) and leased lines of BSNL interconnecting CIL HQ’s, subsidiary HQ’s and MOC for voice, data and video conferencing in an integrated manner for seamless flow of information over the network. Similarly rollout of network is under process of implementation for 11extending such facilities from subsidiary HQ’s to area offices, regional stores, projects, Coal loading points etc.

Considering significant role of telecommunication and IT in providing a proper decision support system at area level, CIL has been and MCL for implementation of Coal Net application software. Necessary infrastructure preparation has been carried by respective subsidiary and implementation is in progress, initiative has been communication.

- 56 -

DISTRIBUTION(METHODS & PROBLEM)

 FACTOR AFFECTING CHOICE OF TRANSPORT METHOD 

The type of Coal to be transported. The amount of Coal to be transported. The distance to be transported. The facilities at the loading point. The facilities at the consumer’s premises. The access at the consumer’s premises. The number of transfers involved which may cause degradation of

coal. 

AVAILABLE MEANS OF TRANSPORT

RAIL Largest users including Power sectors may be able to make use of rail transport which is often organized on merry go round system. Where the same rolling slack, designed for rapid loading and unloading, travel between supply point and the consumer.

ROADSmall proportion of Coal used by the industries is carried by road. The commercial vehicle used for this purpose differs mainly in the method of unloading.

WATER In the past coastal city and inland water ways were used extensively for transportation of Coal, by this method has been almost supersedes by the kind transport.

- 57 -

CONVEYOR Some very large power one losses built adjacent to Coal preparation plants can be supplied directly by conveyor, but that is rare. 

PROBLEMS IN TRANSPORTATION OF COAL

Railways Roadways

Problem in railways transport Currently 75% of total dispatches are by rail transport. Hence railways are the most importance means of transport of Coal & Coke. It is paradoxical that Coal India has added 6 million tones of Coal to its slack, even then consumers were in distress due to the scarcity of Coal/Coke; Coal India official blame railways for the letter’s inability to supply adequate no. of wagons passing the buck is a time honored preoccupation of the railways of Coal authorities. While railways speak man complain of loading wagons, CIL officials periodically site instance when the railways send to many wagons to a particularly loading point on a day when workers are always on holidays and the complain in the next day at the press conference about how scores of wagon lies unloaded. 

Problems in roadways transport

According to estimates made by the COAL INDIA about 20% of the dispatches are made by the road. CIL does not encourage the road dispatches due to its certain disadvantages. This cost is substantially higher than the rail freight. Due the increase in the CIL prices the cost of road transport has increased which ultimately affect in the increase of the landed price of coal and coke. Consumers whose requirement cannot be met due to the poor wagon supply are constraints to life byroad by paying higher prices. Road transport may not be considered uneconomical within a 100 km radius of the pithead, but at a time when factories in North and South India, thousand miles away from the pitheads, are transporting by

- 58 -

truck the current practice goes completely again the professed intension of the Govt. energy policy, which aims at minimizing CIL consumption and maximizing Coal consumption.

NEW COAL

DISTRIBUTION POLICY

  - 59 -

NEW COAL DISTRIBUTION POLICYAs we already know that there are two types of sectors i.e. Core and Non-core. The CIL and Govt. of India approve the new coal distribution policy which is as follows:

(1)Classification of consumers:  Classification of consumers into core and non-core has been

reviewed instead of each consumer would be treated on merit keeping in view, inter- alia the regulators provisions applicable thereto and other relevant factors. 

(2)Distribution and pricing of coal to different consumers sector: Defense sector and railway will get total of their Coal

requirement at notified price. Power utilities including independent power plants, captive

power plants (CPP) and fertilizer sector 100% of quantity as per the normative requirement of the consumers would be considered for Fuel supply agreement (FSA) by Coal India Ltd. at fixed price to be declared. The unit/power plant which are yet to be commissioned but whose coal requirements has already been assessed and accepted by ministry of coal and linkage/letter of assurance (LOA) approved as well as future commitment would also be covered according.

(3)Other consumers:We know that 75% of the quantity as per the requirement of the consumer / actual users would be considered for supply of coal

- 60 -

through e- auction at Notified price, to be fixed and declared CIL. The remaining 25% of coal get by e-auction as per their preference.  At present small and tiny consumers in Non-core sector, whose Annual consumption is less than 500 metric tones are eligible to get coal through state nominated agencies/NCCF etc. the minimum quantity through state agencies is 400 tones per annum will take coal through Coal India Ltd. subsidiary companies through FSA’s. For the non-core sector and annual requirement is less than 4200 tones, they have to be entered in FSA by showing satisfaction level document of they to go state guises.

(4)Small consumers & medium consumers: Small & medium consumers like smokeless fuel brick kiln etc. have to be registered under FSA with coal companies by the state govt. agencies. Till further the state Govt. notified the agency, the fuel supply agreement would be based on firm commitment and compensation for default in performance on either side. The price charged to such agency would be the same as notified price as applicable to other consumers. The agency may charge freight up to 5% margin as service charge. The quantity allocated to this sector may be received on the basis of their performance in the beginning of every year. Allocation of quantity is based on the consumption pattern in past. 

(5)Replacement of linkage system by Fuel Supply Agreement (FSA):If the buyers do not maintain continuation in FSA with six months in a year then they may be allocated the coal at auction. 

(6)Policy for new consumers:New consumers have to be allocated the coal after issuing letter of assurance (LOA) valid for 24 month for power sector. After issuing letter of assurance they have to enter FSA and then FSA would be completed within three months. For allocation they have to deposit Earnest Money Deposit. If EMD failure occurs, then 5% of the value is kept. 

(7)Letter of assurance for new consumers: 

- 61 -

New consumers from state, central power utilities, CPPS, Independent power producer, fertilizer LOA, are based on prevailing norms and recommendation of administrative ministry.  All other consumers may be issued LOA by CIL. LOA will be issued by CIL to the applicant consumers consequent upon payment of EMD to the coal company. The amount of EMD could be initially issued at 5% value of annual coal requirement. However, CIL may decide a different level, based on various facts the approval of board of directors. Loading will be valid for a period of 12 to 24month as applicable and if after paying buyers reject the order then that amount will be forfeited.

(8)E-auction of Coal Coal distribution through e-auction was introduced with a view to provide access to coal for such consumers who are not able to source coal through the available institutional mechanisms for reasons like the seasonality of coal requirement, limited requirement of coal not warranting long term linkage etc. In long run, it is expected that e-auction may help in aerating spot as well as future market of coal in the country so there is some fresh scheme of e-auction will be introduced. a) Any buyer will be entitled to buy coal under auction.

b) Coal Company may be allowed to fix undisclosed reserve price not below the notified price.

c) E- auction should be announced well in advanced and be given wide publicity to all consumers who intend to participate.

d) In order to address the concern of such industrial consumers who wish to have an assured supply over a long period, say one year CIL will earmark a fixed quantity which will be provided to highest bidder/ bidders as per bidders requirement during the time of bidding. 

- 62 -

- 63 -

FINDINGS

After analyzing, studying the whole aspect of South Eastern Coalfields Limited when engaged in the job training, I found the following.

As we know India is the third largest Coal producing country. It contributes around 85% of the total coal production in India. It is the largest company in the world in the terms of coal production in India. It is the largest company in the world in terms of coal production. It employs nearly 425 lacs people and is the largest corporate employer in the country. Coal India limited is one of the largest companies in the country, turnover being around Rs. 38631 billion in 2009-2010. it is one of the largest tax payers.

From the above, I analyzed that Coal India Limited, provides positive economic condition to the country. Firstly according to me,

It employees lakhs of people. It feels proud for the country people as it produces 85% coal by

which many company depend for its production. One of the most important things about the Coal India that in our

country the highest percentage of power produced by coal. Without coal we cannot imagine electricity. We depend on thermal electricity and for depending on other

electricity as it pays 35.7 billion tax to the government.

- 64 -

The money is used in many services like hospital, school and man. Provides many facilities to its employees like medical facility,

school facility, home to live, electricity, water and many stall services etc.

I also found that the present sales and distribution system which is also known as linkage system is very much effective rather than the previous sales system which was fuel agreement system.

- 65 -

CONCLUSION

After analyz ing the above company I come to the fo l lowing conc lus ion which i s as fo l lows:

Firs t i t i s very in te res t ing to know that th is company i s the 3 r d l a rgest coal producing count ry .

I t g ives opportuni t ies to 4 .25 lacs employee and the i r needs .

I t a l so cont r ibutes in shaping the count ry by paying tax .

The prof i t i s a l so good but prof i t i s not shown of maximum.

Per tonne pr ice i s very cheap and buyers re lease the produc ts a t maximum price .

I t i s a very good aspec t tha t is under the government of India , i f i t i s under pr iva te sec tor then i t c rea tes a monopoly in the count ry .

The coal d is t r ibut ion pol icy i s very effec t ive and auct ion i s very in teres t ing for buyers .

The company a lso takes pos i t ive decis ion which does not involve services to the buyers l ike t ranspor t ,

- 66 -

mater ia l handl ing and logis t ics supply chain e tc . company gives t ime to rece ive the coal wi th in 45 days .

And a t las t I want to say tha t th is company received award of Mini Ratna and s tep toward Nav Ratna .

BIBLIOGRAPHY

http://ccl.gov.in/biz/sales_market.htmhttp://www.coalindia.in/ContactUs.aspx?tab=2http://coal.nic.in/http://ccl.gov.in/http://www.bccl.cmpdi.co.in/OB Sales&Mkt.htm

- 67 -