Central Coalfields rules out enhanced coal supply

Ranchi-based Central Coalfields Limited (CCL) has stated it will not be able to supply coal to proposed coal-based industrial units recently approved for implementation by the Jharkhand government.

The state has cleared more than 20 projects on the basis of proposals received from a wide range of investors.

The possibility of supplying coal to industrial units was ruled out by the chief general manager, project and planning of CCL, A N Singh.

He said, "We cannot think of going in for extension of coal linkage with new industries as in the prevailing situation we cannot maintain supply to established core sector enterprises like steel and power under existing coal linkage agreements."

Supply of coal to the new industrial units would be possible only if the production capacity of CCL was increased through large investments in expansion of existing projects and development of new mines. Funds and land would have to be made available for this, he said.

CCL chairman and managing director Jai Prakash Sharma said it was likely to report net profit of Rs 250 crore in fiscal 2002-03 after paying tax and making a provision of Rs 190.42 crore towards interim relief under the national coal wage agreement.

In the ten financial years from 1994-95, CCL ran up accumulated losses of Rs 1,069.75 crore.

Sharma said CCL would be able to wipe this put and come out of management under guidelines of the Board for Industrial & Financial Reconstruction (BIFR) following statutory audit of its accounts.

The coal supply mechanism, called a 'linkage' in industry parlance, was introduced by the ministry of coal some years ago to secure supplies to core sector industrial units. Later, the government owned Coal India Limited (CIL) extended the scheme to cover private sector enterprises.

After economic liberalisation in 1990s, CIL failed to generate or allocate enough funds as the holding company to subsidiaries like CCL. This resulted in stoppage of all expansion projects including sanctioned coal projects, of the subsidiary coal companies of CIL.

CCL suffered severely on this account. Its internal fund generation was meagre and stagnant as its operations were below optimal levels. CCL also suffered on account of high establishment cost and a huge manpower base of more than 70,000 employees.

CCL's coal production in the last ten years was limited by lack of investments in capacity expansion. In 1994-95, its coal production was around 31 million tonnes. In the financial year 2003-04, this had risen only marginally to approximately 37 million tonnes.

Its profitability suffered as a result. CCL made profits in only two years in the last 10 financial years. Its net worth turned negative and it was referred to BIFR. In the fiscal 2002-03, CCL recovered and reported gross profit of Rs 385 crore.