Dubai firm to make M'lore hub for coal imports

The UAE-based Rs 1,600 crore integrated energy solutions major Coal & Oil company (C&O) will set up a coal hub at Mangalore.

It is the firm's third in India and will cater to the growing coal requirements of companies in the southwestern parts of the country including Karnataka and Kerala.

C&O group, which presently imports 6 million tonnes of coal, is aiming to double its coal imports to 12 million in the next three years. Of this, one million tonne will be handled out of Mangalore.

C&O group, which has been bringing coal to New Mangalore over the last eight years, has brought its own ship carrying 65,000 tonnes of coal to Mangalore for the first time.

To cater to the growing needs of its customers in the region, the company plans to buy another two to three ships. The company will import coal from South Africa and Indonesia to Mangalore. The company has two hubs at Chennai and Mumbai.

"Two years ago, we acquired a 71,000 dead weight tonnage (DWT) geared Panamax vessel, to ensure timely supply of coal to our customers. We will acquire another two to three Panamax ships in the next few months. This will help us continue our focus on the coal sector in India and achieve our goal of handling 12 million tonnes of coal in the next few years," C&O group president and CEO Ahmed A R Buhari said.

C&O's customers in Karnataka include Mysore Paper Mills, Grasim in Harihar, Karnataka Power Corporation Limited and sugar mills in Davanagere.

"We are rapidly expanding our operations in the western, southern and eastern parts of the country. We aim to tap the sugar sector in a big way by supplying coal to integrated sugar mills including co-generation power plants. By channelling coal supply through Mangalore port, we will make substantial savings to our customers (at least Rs 100 per tonne) and to ourselves," he told Business Standard.

The commissioning of the deep draft berth at the New Mangalore Port along with the broad gauge rail link from Mangalore to Hassan has made import of coal more viable through New Mangalore Port.

"Our main purpose of importing coal to Mangalore is to save time in coal transit and supply to our customers. The distance between Mangalore and South Africa is 10 days while it takes 15 days to reach Chennai. This will help us reach our customers in a shorter duration and thus save costs on inventory and logistics," said C&O deputy general manager (commercial) Lakshminarayana.

The company is in the process of setting up retail sales network in all coastal states.

It is also looking at power sector and plans to set up coal-based power plants in coastal cities. The company plans to enter mining in India. It is also looking at acquiring coal mines in Indonesia and India, Buhari said.

To provide better service to its customers C&O plans to set up a captive stevedoring company. "We are in talks with a few medium-sized stevedoring firms which have all India operations and are in the process of acquiring one firm," he said.

This Dubai-based group also plans to set up a power plant of 500 MW capacity in the coastal states within two years to three years.

The company, having notched up a turnover of Rs 1,600 crore in 2005-06, expects sales to cross Rs 2,000 crore in the present fiscal and Rs 3,000 crore in 2007-08. Significantly, majority of this comes from Indian business.