The marketing of Coal India

When Coal Turned Gold

The Making of a Maharatna Company

Partha Sarathi Bhattacharyya 

Penguin Random House 

180 pages; Rs 699

Railway Minister Piyush Goyal announced recently that the Indian Railways would run entirely on electricity by 2022. Most of that electricity will be generated through coal-fired plants, which puts a question mark on the feasibility of that target. Just a month before in July, the other ministry under the minister's charge, coal, was wrestling with the crippling shortage of coal that industries are facing. 

None of this seems to impact the fortunes of Coal India Ltd (CIL), India’s monopoly producer of the fuel, in the stock market. What worries investors instead is CIL's stock price, since it is currently undervalued, trading at less than 11 times its estimated earnings. Investors have pumped big money into the government-owned company knowing that the coal it produces will sell well. CIL shares account for over one per cent of the Bombay Stock Exchange’s market capitalisation. Investors are concerned about whether the government has made up its mind to sell more CIL shares in the market. If the government does so, as it may do this year, the company’s raiments would certainly look less like gold.

CIL, thus, practically leads a double life — under the spotlights at Mumbai and away from it in the mines that dot mostly eastern India. This dual existence makes its business case as a monopoly producer of coal. That it is inefficient does not concern the markets; that it is the world's cheapest producer of coal is important data. Even if the government ends CIL’s monopoly, investors will be happy as long as the company can compete on prices. 

It is this connection that made a compulsive case for listing CIL, the point Partha Sarathi Bhattacharyya brings out in his book When Coal Turned to Gold: The Making of a Maharatna Company. Mr Bhattacharyya was CIL chairman when it made its maiden issue in October 2010. He didn't just happen to be there when this happened; he had thought it possible and made it possible over his four-and-a-half-year term. For a brief period, CIL also became the most valued company on the Indian bourses. That was also possibly the last piece of good news to come out of CIL and the coal sector for a long time thereafter. 

“When I took over as CIL chairman, it was time to pursue one goal. The company was growing and enjoying profits. This was, however, perceived by many as the outcome of its monopolistic status….In a generic sense, the company lacked the recognition and admiration for what it stood for. It faced brickbats too for the negatives, resulting in an atmosphere of low self esteem. This needed to change…,” Mr Bhattacharyya writes. 

This is what he sets out to do, essentially narrating a feel-good story about CIL. Considering the almost sordid history of the company, it is to his credit that he manages to do so, that too quite persuasively. In the process, he largely eschews a habit among the bosses of the Indian public sector when they write about the company they steered. This is not one of those opaque accounts rife with self-praise. Books of that nature have cluttered the path for a student of Indian economy to understand how the Indian public sector has performed. But despite the sharply elevated level of interest in the Indian economy, there are few mature reads on their equivalent in India, unlike in the US, where objectively written books on the private sector giants such as the GEs, General Motors and Lockheed Martins help you understand the world's largest economy. In India, the objective business biography is non-existent and the barrenness is particularly stark in the case of the public sector. 

This book should fill in some of those gaps. It has its weakness, principally that of glossing over the troubled relationship between CIL and its political bosses. Mr Bhattacharyya makes only passing references to the troika of trade union politics, environment challenges and violence that has hobbled development in India's coal belt. He makes up for it by guiding students on what it takes to bring a mega-company to the bourses. That is a fascinating read in its own right.

(The reviewer is author of India’s Coal Story: From Damodar to Zambezi Sage, 2017)