The Hindu Business Line : `Half of our unviable mines will start making profits'

THE delegation of Coal India Ltd's major decision-making power regarding production planning, opening up new mines, purchase of equipment, and marketing of coal to non-core sector consumers to its production subsidiaries has not only made the Chairman-cum-Managing Directors (CMDs) of each subsidiary more powerful but has also made them accountable for the future growth of their respective companies. Mr M. K. Thapar, CMD of South Eastern Coalfields Ltd (SECL), has prepared a time-bound strategy to augment production and profitability of his company, which has at present 76 underground mines, 19 opencast mines and two mixed mines. He has plans to develop 15 new mines during the Tenth Plan and a total of 13 new mines during the Eleventh Plan so that SECL can produce at least 100 million tonnes (mt) of coal by the terminal year of the Eleventh Plan as against production of about 66 mt in the year ended 2002-03.

In an exclusive interview with Business Line at the SECL headquarter at Bilaspur (Chhattisgarh), Mr Thapar spelt out his perceptions and the future strategy for his company. Following are excerpts of the interview:

A little over two months have passed since you took over charge as CMD of SECL. What is your perception about the performance of the company?

I would like to say that I have been re-posted to SECL on May 14. I have worked in this company at different levels starting from the level of under-manager. This is known as a profit making company and over the years has been marching towards improvement.

This company is known to be one where new underground technology has been adopted and is a pioneer in many aspects connected with coal mining. I have in fact worked on three strategies. First, there is the emphasis to cut production cost. We have planned to reduce expenditure by 10 per cent. Second, output must be increased by 10 per cent. This is a mammoth task looking at the size of the company. Third, the grade-mix will have to be improved to increase sales realisation.

You have firmed up a strategy to create additional coal-producing capacity of about 32 million tonnes (mt) by the end of the Tenth Plan. How do propose achieving that target?

By the end of the Tenth Plan, that is, 2006-07, the company has targeted a production of 85 mt. I would like to touch 90 mt mark in 2006-07. To achieve this, we have planned to produce 73 mt in 2003-04 against the target of 69 mt. The company has giant mines like Gevra, Kusmunda (opencast) and Churcha (underground).

What is your plan for mines that are unviable?

There are 31 underground mines that are running at a loss. These mines are located in five areas: Korba, Jamuna and Kotma (J&K), Sohagpur, Johilla and Raigarh. We have already taken steps to bring half of these mines into profit. We are sure to turn around the mines in the Raigarh, Johilla and Sohagpur areas. SECL has introduced the "continuous miner" technology in a few underground mines. Are you satisfied with the performance of this technology?

We have already started coal production through "continuous miners", which has proved to be an excellent system. Further, the technology adoption by the workers has been excellent. The production achieved has been more than our expectations. This has happened in Chirimiri colliery. Three more such systems will be introducedThe Govt is encouraging private sector coal mining. Do you foresee any competition from private operators?

Initially no, but in due course a big threat will be posed by the private players. The Government will not be in a position to create a level playing field between the new private companies, imported coal and PSUs like CIL.

Right from the nationalisation of coalmines and formation of Coal India we have been doing a lot of social work, community development, etc., which would otherwise have been looked after by the State Government.

All these activities add to our production cost. Similarly, the wage structure of CIL is much better and will continue to be better than any private player. When we talk about imported coal, the duties levied on the imported coal are much lower than the statutory rates paid by the coal companies.

How is Chhattisgarh being benefited for having the head office of SECL in the State?

SECL is contributing about Rs 850 crore to the State Governments of Madhya Pradesh and Chhattisgarh in the form of royalty and cess.

The entire statutory duties paid to State and Central Government amount to Rs 1,176 crore. Over and above this, we are paying about Rs 240 crore as dividend to Coal India. The retained profit of the company during 2002-03 has been only Rs 188 crore against payment to the State Government of around Rs 850 crore.

This implies that the ratio of retained profit of the company to contribution to the State Government is 1:5.

A significant amount of the total net turnover of Rs 4,230 crore is spent within the State as per recent calculations. This amounts to Rs 3,300 crore, which is 77 per cent of the net turnover.

Which are the areas where you may opt for outsourcing of jobs?

Except in one or two areas, coal loading and transportation in opencast mines is carried out by ex-servicemen.

As far as outsourcing of over-burden is concerned, we are doing it only when the departmental excavation is found to be uneconomical for new mines.

How many virgin coal blocks is your company going to give to private entrepreneurs for captive mining?

As on date 11 blocks have been identified for captive mining.

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