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Management Discussion  
Coal India Ltd.
 
BSE Code 533278
ISIN Demat INE522F01014
Book Value(Rs.) 23.01
NSE Code COALINDIA
Dividend Yield % 6.67
Market Cap(Rs. in millions) 1209743.57
P/E 12.12
EPS 16.19
Face Value(Rs.) 10  
Year End: March 2015
 

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1.0 INDUSTRY STRUCTURE AND DEVELOPMENT Coal and Coal India Limited

In India, coal is the most dominant energy fuel which meets more than 50% of country's primary commercial energy requirements. The pivotal role of coal is expected to continue in the foreseeable future, primarily because of abundance of coal reserves, easy accessibility and importantly affordability. As of 1 April, 2015, the estimated geological resource of Indian coal was 306.59 Billion Tonnes (Source: MoC, Gol).

Coal industry in India is brdominantly state owned. Major share of the country's coal production is contributed by PSUs like Coal India Limited, Singareni Collieries Company Limited, Neyveli Lignite Corporation Limited produces what is popularly known as brown coal. Coal production figures for 2014-15 (provisional) indicates that, of the 610.84 Million Tonnes of the country's coal production, around 81% was contributed by Coal India Limited. Coal India virtually empowers the power sector in the country supplying coal to 97 out of 100 power utilities.

Coal India is the apex holding company under which there are seven coal producing subsidiaries and one mine Planning and Design Institute. Coal mining operations of Coal India are sbrad over eight provincial states of the country. Coal India was incorporated in 1975 with a coal production was 79 Million Tonnes. Today, it is the largest coal producing company in the world with a production of 494.238 Million Tonnes during the fiscal 2014-15.

4.0 Outlook:

The Government of India has taken an ambitious programme of round the clock power supply across the country in the next 5 years. Creating infrastructure is another thrust area of the Government, which would have a positive bearing in the demand of cement as well as long products in the steel industry. Growth in power, cement and steel sectors would bolster growth in the demand of coal.

Congruent to the growth plan of the Government, Coal India Ltd (CIL) has brpared a roadmap to achieve a coal production target of 908 Million Tonnes (Mt) by 2019-20. In 2015-16, CIL has envisaged a coal production target of 550 Mt with a capital investment of Rs. 5990.50 Crs. In addition, CIL has envisaged for investment of Rs. 4150.00 Crs in different other schemes in 2015-16 like development of railway infrastructure project, solar power, railway wagon procurement, coal bed methane (CBM), surface coal gasification etc. Further, CIL plans to significantly ramp up its investment programme in next five years.

Market Related Outlook:

• The gap between demand and availability of indigenous coal in the current fiscal is estimated at about 210Mt. XII Plan document projects that this gap may go up to a level of about 273 Mt by 2021-22. CIL shall strive to reduce this gap to a large extent by increasing domestic production and, if required, by import as mandated in the Presidential Directives.

• CIL's thrust on forward e-auctions also provides the end-consumers an opportunity to enter into short-term off-take agreements in a transparent manner. In 2014-15, CIL allocated 3.55 Mt through forward e-auctions.

Operations Related Outlook:

• So far, CIL has identified 106 on-going projects & 67 future/new projects, which together will contribute about 80 % of total coal production envisaged for 2019-20. Subsidiaries like SECL, MCL, NCL& CCL will be the major contributors.

• The expansion program will be managed in a structured manner with the help of IT enabled actions. The implementation of ERP solution to enable transparency in operations, maintenance and support functions, is under consideration.

• The company has recently concluded a study for mechanization and automation level across a substantial number of mines for identification of opportunities in mine planning, exploration, survey, operations and maintenance.

• CIL is in the process of revising its HR policy for augmenting capacity of training institutes across subsidiaries including IICM. Several other actions for building human resource capacity are also being contemplated in collaboration with reputed institutions.

• To support increase in production on sustainable basis, synergic growth in exploration is absolutely necessary. More use of hydrostatic drilling, 2D Seismic Survey Technology etc for fast drilling to achieve high rate in exploration has been envisaged. As such, CIL will continue to focus on increasing its reserve base in India.

Outlook regarding evolution of the ecosystem:

The envisaged coal production target of CIL in coming years will be materialized only by working closely with other stakeholders such as Indian Railways, State Governments, Regulators, Community and other Market-participants. CIL expects the following outlook as it will play out in the next few months:

• Last mile railway connectivity between growing coal-fields and arterial lines as well as capacity improvement in the trunk routes is crucial for evacuation of coal. There are several railway projects under different stages of planning, engineering, construction in the growing coal-fields. Government of Chhattisgarh has entered into JVs with CIL and IRCON to expedite the process with regard to key railway projects in the State. Similarly, Government of Odisha & Jharkhand have signed MoUs with CIL & IRCON for implementation of key railway projects in their States.

• MoC/CIL is working with Ministry of Power, Railways and other public sector power generation companies to rationalize coal linkages. A study regarding this was recently concluded by the Inter-ministerial Task Force.

• MCL/CIL has formed a SPV namely Mahanadi Basin Power Limited (MBPL) with 100% share held by MCL with power generation capacity of 2X800 MW through pit-head Power Plant at Basundhara Coalfields.

• CIL is also working closely with Government of Jharkhand & West Bengal to ensure quicker implementation of Master Action Plan of Jharia & Raniganj coalfields.

Research & Development:

• CMPDIL is a national coordinator of S&T projects in coal sector as well as R&D projects of CIL. In the coming year, the following strategic projects are expected to be taken up:

5.0 RISKS AND CONCERNS

The major risks and concerns are outlined below:

A) Strategic Risk

i) Increase in input costs.

ii) Lack of Railway infrastructure restricting evacuation.

iii) Continuation with loss making legacy mines taken over at the time of nationalization.

iv) Change in regulations and policies of GoI in regard to opencast mining may impact CIL as majority of production is OC dependent.

B) Operation Risks

i) Few mining areas in Jharia and Ranigunj are susceptible to fire and land subsidence, may lead to risk of safety on human life and property.

ii) Monsoonal months deplete production as well as evacuation.

iii) High dependence on railways for evacuation of coal

iv) Rail connectivity is the biggest challenge for increasing production.

v) Law & order problem in some mining areas.

vi) Coal deposit in mines are not homogeneous and may have grade variation with the seam at some places.

vii) Talent migration of skilled manpower with the opening up of private sector.

C) Financial Risk

i) Increasing value of land compensation and inputs leading to non-viability of new projects

ii) Additional levies to District Mineral Development Fund (DMDF) as per MMDRA 2015.

iii) Difficulties to downsize unproductive manpower acquired due to land acquisition and change of technology.

iv) Changes in environmental laws may lead to higher compensation pay-out by CIL.

v) Varying R&R policy in different states increases burden on Coal India.

vi) Fall in the price of imported coal and increase in royalties, cess and other duties on coal produced by CIL.

D) Project Risk

i) High cost and delay involved in rehabilitating dislocated villages.

ii) Infrastructure constraints for expansion.

iii) Delay in getting green clearances.

6.0 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Coal India Limited (CIL) has robust internal control systems and processes in place for smooth and efficient conduct of business and complies with relevant laws and regulations. A combrhensive delegation of power exists for smooth decision-making. Elaborate guidelines for brparation of accounts are followed consistently for uniform compliance. Further, all the key functional areas are governed by respective operating manuals. In order to ensure that all checks and balances are in place and all internal control systems are in order, regular and exhaustive internal audits are conducted by experienced firms of accountants in close co-ordination with company's Internal Audit Department. Besides, the company has Audit Committee to keep a close watch on compliance with Internal Control Systems.

7.0 DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

FINANCIAL DISCUSSION AND ANALYSIS

Income :-

The income of the Company comprises of revenue from operation and other income. The total revenue for fiscal 2015 is Rs. 80690.71 crore as against Rs. 77779.40 crore in the brvious year registering an increase of 3.74 %. Major elements of income are discussed below:

Revenue from Operations: Sale of Coal

Sales is brsented as gross sales net of various statutory levies comprising royalty, cess on coal, central sales tax, stowing excise duty and sales tax etc. The Income from sale of coal is mainly dependent on the pricing and production of coal and distribution thereof.

About 87% of our coal was sold under notified price to customers having fuel supply agreements (power and other than power both included) and sale of beneficiated coal (washed coal) was around 3% through negotiated price with customers. About 10% of total coal sold was through e-auction mechanism, the price determination of which is completely dependent on market dynamics.

Average realization of coal sales through e-auction increased by Rs.268/ton i.e. to Rs.2450/ton in FY 2014-15 from Rs.2182/ton in FY 2013-14 resulting in increase in sales by Rs.1258 crore. However, decrease in e-auction volume by 11.10 MT from 58.01 MT in FY 2013-14 to 46.91 MT in FY 2014-15 has resulted in decrease in sales by Rs.2422 crore.

During the year there was no change in the notified price (except for increase in add-on price in respect of coal produced from Rajmahal mine of ECL from Rs.300/tonne to Rs.390/tonne w.e.f. 01.04.2014), however average FSA realisation shows some favourable variance owing to better grade mix realisation.

Off-take during 2014-15 increased to 489.38 million ton from 471.58 million ton in brvious year.

Other Operating Revenue:

Major portion of other operating revenue is from loading and additional transportation charges recovered from the customers. Rate of the loading and transportation charges was increased w.e.f. 17.12.2013, thus during the fiscal 2015, company has earned at the increased rate for the full financial year which has contributed to the additional earning of Rs.329.35 crore i.e. from Rs.1697.61 crore during fiscal 2014 to Rs.2026.96 crore during fiscal 2015. Other operating revenue also included Facilitation Charges on Import of Coal (for the services provided by CIL as a part of fulfillment of FSA), and Subsidy for sand stowing & protective works received from Govt. of India.

Other Income

Other income primarily includes (i) interest income from banks, employees and others, (ii) interest on our investments in the 8.5% Tax Free RBI Power Bonds (which resulted from the securitization of our sundry debtors), (iii) Dividend from mutual funds, (iv) any liquidated damages or penalty payments by our suppliers and third party contractors. Other income also includes rental income and any profit on sale of assets. Other income further includes any write back of provisions and liabilities made in brvious year.

During the year other income declined by 8.38% from Rs.7171.88 crore in FY 2013-14 to Rs.6570.64 crore in FY 2014-15 largely due to lesser interest earning on bank deposits by Rs.382.16 crore owing to reduction in average investment in bank deposits resulting out of substantial outflow of fund for high dividend payout in consecutive two years i.e. FY 2013-14 and FY 2014-15.

Cost of Material Consumed

Cost of material consumed relate to materials used in our coal mining and processing operations, primarily petrol oil and lubricant (including diesel), explosives, and timber. Other consumables used in our coal mining operations include tyres, spares for heavy earthmoving machineries, other plant and machinery relating to our coal handling plants and beneficiation facilities, vehicles, and other miscellaneous stores and spares.

Consumption of stores and spares increased by Rs.234.39 crore or 3.34%, from Rs.7022.05 crore in fiscal 2014 to Rs.7256.44 crore in fiscal 2015, mainly due to increase in annual weighted diesel price by around 4.22%, increase in volume of composite production from 1136.72 M Cum in FY 2013-14 to 1240.71 M Cum in FY 2014-15 or 9.15% and general inflation during the year.

Employee Benefit Expenses

Employee benefit expenses include salary, wages and allowances, any provisions relating to Employee benefit, contributions to provident fund and gratuity, overtime payments, leave encashment, attendance bonus, productivity and performance linked bonus and other incentives, and other employee benefits.

Employees remuneration and benefits, which rebrsents the largest component of our expenditure, increased by Rs.1959.72 crore, or 7.02%, from Rs.27914.40 crore in fiscal 2014 to Rs.29874.12 crore in fiscal 2015.

While contribution to Provident/Pension fund is expensed at defined contribution basis, some other benefits namely Gratuity, Leave Encashment etc. are provided as per defined benefit plan on the basis of their actuarial valuation at the end of the reporting period. During the year, actuarial valuation towards Gratuity, Leave Encashment and some other post retirement employee benefits have been increased owing to the fall in the yield of the secured Govt. bond (of appropriate tenure linked to the average service life remaining for the employees) which is applied to arrive at the brsent value for such liability, i.e. to bridge the mismatch in earning of the asset against such liability. The impact of such actuarial valuation is Rs.955.17 crore.

Ex-gratia paid during the year to non-executive employees was increased to Rs.40,000/- per employee as compared to Rs.31,500/- per employee in brvious year resulting in additional cost of Rs.293.06 crore.

Other increase in salary is due to annual normal increment in salary & DA, which however is offset to some extent by decrease in employees due to retirement.

Output per manshift (OMS) during 2014-15 improved to 6.20 tonnes per manshift from 5.62 tonnes per manshift of brvious year

Power and Fuel

Power and fuel rebrsents cost of electricity consumed in our operations, including electricity purchased from external sources and cost of internal power generation relating to diesel generator sets.

Power and fuel expenses was Rs.2347.28 crore in FY 2014-15 as against Rs.2282.23 crore during FY 2013-14.The higher amount of power & fuel expenses in current year FY 2014-15 was due to increase in consumption due to higher production as well as marginal increase in power tariff.

Corporate Social Responsibility Expenses

With the implementation of new Companies Act 2013, effective from fiscal 2015, expenditure on CSR are guided by the provisions of Companies Act. During the year total expenditure on CSR was Rs.298.10 crore as against Rs.409.37 crore during fiscal 2014. During fiscal 2014 expenses on CSR was higher owing to contribution made on account of natural disasters in Odisha and Uttaranchal.

Contractual Expenses/ Repairs

Contractual charges primarily consist of transportation charges for coal, sand and materials carried out through third party contractors, contractor expenses relating to wagon loading operations, hiring charges for plant and machinery and heavy earthmoving machinery rebrsenting cost of coal extraction and overburden removal activities outsourced to third party contractors, and other miscellaneous works carried out through third party contractors such as for haul road maintenance at mines and temporary lighting. Repairs consist of cost of repair and maintenance of plant and machinery relating to our operations, rehabilitation of heavy earthmoving machinery, office equipment, vehicles and other miscellaneous assets

Contractual Expenses/Repairs increased by Rs.1822.64 crore, or 23.33%, from Rs.7812.71 crore in fiscal 2014 to Rs.9635.35 crore in fiscal 2015. Contractual Expenses/Repairs has increased mainly because of increased volume of composite production which is 9.15%, impact for increase in wages of contractual workers and also due to rise in annual weighted diesel price by about 4.22% both of which are recovered by the contractors from the company through escalation clause.

Finance Costs

Finance costs decreased by Rs.50.68 crore, or 87.38%, from Rs.58.00 crore in fiscal 2014 to Rs.7.32 crore in fiscal 2015 due to brpayment of IBRD and JBIC loans on 05.11.2013 and 06.12.2013 respectively.

Overburden Removal Adjustment

In open cast mines, with rated capacity of one million tons per annum and above, the cost of overburden removal expenses is charged on technically evaluated average ratio (coal: overburden) at each mine with due adjustment for advance stripping and ratio variance account after the mines are brought to revenue. The net of balances of advance stripping and ratio variance at the end of the relevant period is shown as cost of removal of overburden under the head current assets or current liabilities, as applicable.

Overburden Removal Adjustment increased by Rs.540.14 crore, or 16.43%, from Rs.3286.56 crore in fiscal 2014 to Rs.3826.70 crore in fiscal 2015. Although the overall OB removal for CIL as a whole increased from 808.40 M cum in FY 2013-14 to 889.80 M cum in FY 2014-15, in a few subsidiaries particularly in MCL, the OB removal decreased by 7.09% from 96.03 M cum in FY 2013-14 to 89.22 M cum in FY 2014­15 despite the production increase by 9.91% from 110.44 MT in FY 2013-14 to 121.38 MT in FY 2014-15. This resulted in a very adverse stripping ratio and required high provision for OBR. Such OBR provision in case of MCL increased by Rs.713.20 crore in FY 2014-15.

Debrciation/ Impairment

Debrciation on fixed assets is provided on straight line method at the rates and manner specified in Schedule II of the Companies Act 2013 except otherwise for those assets for which technically evaluated higher rate of debrciation has been considered as a policy. Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

Debrciation/ Impairment increased by Rs.323.39 crore, or 16.20 %, from Rs.1996.41 crore in fiscal 2014 to Rs.2319.80 crore in fiscal 2015, owing to application of new rates as per Schedule II of Companies Act, 2013.

Provision/write-off

Provisions/write-off include any provisions for doubtful debts and advances, provisions for unmoved/obsolete stores and spares inventory, provisions relating to impairment of assets, and any other miscellaneous provisions..

Provisions made are brsented net of any write back of provisions. Write-offs include write-offs for doubtful debts, doubtful advances and other write-offs.

Provisions/write-off decreased by Rs.160.73 crore, or -13.92%, from Rs.1154.53 crore in fiscal 2014 to Rs.993.80 crore in fiscal 2015 due to decrease in write off of doubtful debts. During the FY 2013-14 ECL had written off Rs.127.70 crore in respect of dues from certain customers on account of grade slippage for earlier years.

Other Expenditure /PPA

Other expenditure include various operational, selling and administrative expenses, most significantly under-loading expenses paid to Indian Railways, mine rehabilitation expenses, security expenses, royalty and cess payable on coal used for internal consumption and rent, rates and taxes. Miscellaneous expenses also include traveling expenses, employee training expenses, cost of printing and stationery, communication, advertisement and publicity related expenses, freight charges for equipment and machinery and materials, demurrage paid to Indian Railways and equipment and materials freight carriers, land/crop compensation and hire charges for office administration equipment. Other miscellaneous expenses include expenses incurred for land reclamation relating to rehabilitation and resettlement of affected communities.

Miscellaneous Expenses/PPA increased by Rs.207.41 crore, or 7.22%, from Rs.2870.95 crore in fiscal 2014 to Rs.3078.36 crore in fiscal 2015 due to increased volume of production and normal inflation.

Taxation

Income tax expense comprises current tax expense and deferred tax expense or credit computed in accordance with the relevant provisions of the Income Tax Act, as amended. Provision for current taxes is recognized based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act.

Net Deferred tax assets/ liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits shown in our financial statements. Deferred tax assets and liabilities are measured using tax rates and tax regulations enacted or substantively enacted up to the balance sheet date. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in the financial statement of the relevant fiscal year of change of rate. Deferred tax assets in respect of carry forward losses are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Other deferred tax assets are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized.

All the subsidiaries of Coal India Limited are earning profits. ECL & BCCL, the two subsidiaries which were incurring losses a few years back, has also started earning profits during last few years and continue to earn profit in the current year. Their carried forward accumulated loss as per Income Tax Act has also been totally exhausted and their entire current year profit is taxable. The total income tax expenses during current FY 2014-15 is Rs.7857.30 crore as against Rs.7767.90 crore in brvious year. Effective tax rate has been increased by around 2% as the effective tax rate of one of the subsidiary (BCCL) during fiscal 2014 was much less due to funding to the group gratuity scheme.

During the year, Eastern Coalfields Limited (ECL) one of the subsidiaries of CIL was required to pay Minimum Alternative Tax (MAT) as the same exceeded the normal Income Tax payable for the year. MAT credit being excess of MAT over normal Income Tax payable is recognised as an asset -"MAT Credit Entitlement" for adjustment against normal Income Tax during the specified period under the Income Tax Act, in accordance with recommendations contained in Guidance Note issued by Institute of Chartered Accountants of India. The company shall review the "MAT Credit Entitlement" at each Balance Sheet date and make necessary adjustment during the specified period

(c) HR Transformational Initiatives

The company provides an equal opportunity to all employees to grow and develop in their area of specialization by imparting trainings on special fields and in general. Overall professional development of the employees is at the core of HR policies of the company. The company has established Indian Institute of Coal Management (IICM), Ranchi as an apex training provider, a Management Development Institute at every subsidiary, 102 Vocational Training Centres in all projects and 27 other training centres for imparting management and skill development trainings. In the year 2014-15, 71256 employees have been imparted trainings on various professional fields and skills.

• Skill Profiling

Skill profiling is a company wide initiative undertaken for tracking of critical technical competencies. More than 350 critical skills have been identified across all the functional areas and the executives have been mapped against 4 proficiency levels (Basic, Advanced, Expert and Role model). This is an online process which enables identification of skill gaps, deciding redeployment, implementing job rotation and training & development initiatives etc.

• Online Human Resource Information System (Online HRIS)

The HRIS of CIL is a home grown online initiative with different HR modules for tracking performance, critical skills, employee details, family details, training and development, filing returns under the new Lokpal Act etc. The online HRIS would provide critical support for data driven decision making, brdictive analysis and other HR related analysis for talent management in the company.

• Talent grooming

CIL has embarked on a talent grooming project for developing a critical mass leaders at levels for the business strategy execution. Under the leadership pipeline approach, the senior management team is groomed through an accelerated learning programme in collaboration with IIM, Kolkata and Frankfurt School of Finance and Management, Stockholm School of Economics, St. Gallen, Switzerland and Essec Paris, France. Similarly the middle management team has been groomed in collaboration with ASCI, Hyderabad. The GenNext (junior) management team is being developed in collaboration with IIM, Lucknow. During the year 2014-15, 412 executives had been subjected to the learning process.

Indian Institute of Coal Management conducts management development trainings for all executives on a continuous basis on various aspects like Functional training, General management training, Induction training and other focussed training on specific areas of organizational relevance. In the year 2014-15, 18561 participants among the executives underwent training at IICM.

• Critical Capability Development Initiative

Project Management capability is at the core of CIL's operational excellence. Project Management, Contract Management, Risk Management, Land acquisition, R&R, CSR, continuous improvement are considered as the key capabilities critical for CIL's strategy execution. The executives are encouraged to undergo trainings in these areas which are organized at Indian Institute of Coal Management, Ranchi (IICM) in collaboration with leading training providers in the country. In the year 2014-15, 204 executives underwent training in project management, 99 executives in contract management, 52 executives in L&R & 22 executives in Risk management at IICM.

• Talent acquisition

CIL recruited 872 fresh Management Trainees during the year 2014-15 from multiple sources such as all India level open sourcing, campus sourcing & departmental promotion. They are being groomed as GenNext leaders through off-the-job as well as on-the-job training interventions under the guidance of experienced senior experts in the company. This process facilitates easy transfer of tacit knowledge base of the organization from the elder generation to the GenNext leaders, besides easy adaptation into the organizational culture.

• Revitalizing & benchmarking HR policies (HR Manual)

CIL, with KPMG as the knowledge partner, has completed a combrhensive study of all its HR policies and rules to redefine the role of HR in CIL and to create a business driven HR to take on the business challenges so that HR strategies are well aligned to the business imperatives. The key strategies in the HR manual included a robust succession planning process by leadership pipeline approach, a 4 tier learning and development model focused on competence development, Reward & Recognition for building high employee engagement environment, merit driven career management system, aligning various employee benefits to the needs, mentoring and self development programme for higher talent retention etc. Execution of the above strategies would go a long way in building CIL into a high performing organization.

• HR Impact Studies

Organizational studies are considered as vital for continuously improving the people processes in the organization for high HR impact. CIL with help of Great Place to Work Institute of India has completed an organizational cultural study in the year (2014-15). The study provided insights into the areas of strength and areas of improvement in talent development.

• e- Empowerment of executives

CIL has introduced a scheme, during the year 2015-16 for providing Laptop or device of similar nature to all executives once in every 3 years. Under the scheme, subject to other conditions, all the executives are allowed to purchase a Laptop or any device of similar nature for a cost upto Rs.70,000/-. This is considered to be an important step facilitating digitalization of Coal India.

(B) INDUSTRIAL RELATIONS

Employees are the central force of coal mining and the people processes in CIL encompass not only the concerns of the multiple stakeholders in the value chain of the Company's operations, but also those affected directly and indirectly by such operations. The multiple stakeholders included company's own 3.4 lakhs employees and their families, more than 65,000 indirect workers, villagers around coal fields, auxiliary industries, Govt. & Non Govt. agencies operating in the coalfields etc. CIL is deeply committed to all the stakeholders and is in a constant endeavour to harmonize the varying needs of stakeholders and that of the company, for sustainable growth, with its people centric principles, policies and programmes. The following pro active and strategic IR approach & practices in the company ensure sustainable industrial relations in the company.

• Employee welfare

The company follows a 'total care approach' towards employee welfare. The employee welfare programmes addresses not only the need of the employees but also their families. Employees are provided with free family accommodations, electricity, water supply etc. The residential areas are well connected with roads and other community facilities like recreation centres, stadium, play grounds, Gyms, libraries etc.

The employee and his family members, including parents, are entitled to free medical treatment anywhere in the country. The company has also developed medical facilities at all its operational areas. There are about 80 hospitals, 413 dispensaries and 592 ambulances engaged in the medical services to the employees and their family members. There are 1268 Medical Officers and Specialists who provide round the clock medical services to them.

Educational facilities have been created for providing free education to the children of the employees. There are 63 public schools financed by the company to provide quality education. The company provides scholarships to meritorious students. It also supports higher education by bearing 100% financial support to children getting admissions in Govt Medical colleges and Govt. Engineering colleges.

Employee participation in management

In general, decisions affecting employees are being taken through bilateral forum rebrsented by employees and management. Bilateral forum such as housing committee, welfare committee, canteen committee, etc. are in operation at all projects. Similarly, bipartite meetings under the industrial relations system, are held periodically at unit level, area level and corporate level to resolve issues pertaining to employees service conditions and welfare. Every subsidiary is having an apex bipartite committee (Joint Consultative Committee) headed by the Chairman-cum-Managing Director of the company. The Joint Consultative Committee looks into various strategic issues and issues related to quality of life of employees in general. All these bipartite bodies are rebrsented by employee rebrsentatives.

Freedom of Association

Democratic values are ingrained in the management of human resource in the company. Employees are free to be a part of any registered trade union, political parties and other govt./ non-govt. organizations. The branches of all central trade unions and local unions are operating in coalfields. Their rebrsentation is allowed in the bipartite bodies in the company under the norms of the Industrial Relations System.

Non-Discrimination

The company follows the principles of non-discrimination in employee management. There is no discrimination of the employees in the name of religion, caste, region, creed, gender, language etc. All employees are given equal opportunity in service matters.

Reservation to special groups

The company complies with the provisions under the Presidential Directives on reservation in appointments and promotions, to candidates/ employees belonging to Scheduled caste, Scheduled Tribe, OBC, Physically challenged etc.

Prevention of Sexual Harassment at workplace

Sexual harassment of any form is a misconduct under the Conduct, Discipline and Appeal rules applicable to executive cadre employees as well as in the standing orders applicable to the non-executive cadre employees. Internal Complaints Committee (ICC) is functioning at all levels in the company under the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013.

Diversity Management

The company makes effort to maintain diversity in the configuration of employees by recruiting people from different states through All India based selection and campus selection from across the country. Similarly, it provides reservation to SC, ST, OBC communities. The manpower of CIL constitutes 21.5% of SC, 12.5% of ST and 22.4% of OBC. The female employees constitute 7.7% of total manpower. There is limitation to increase the percentage of female employees due to the legal restrictions in appointment of female employees for mining jobs which constitutes more than 90%.

Health

Initial Medical Examination is conducted for every person seeking employment in the company. They also undergo a periodic medical examination, once in five years. Safety training is an integral part of the overall training policy of the company. The company goes beyond the brscribed norms under the statute and cover maximum employees under the safety training.

Post Retirement Medical Support

CIL has added a post retirement medical benefit to its 3.4 lakhs employees to provide critical health support to the employees and their spouse, post retirement. Subject to conditions, the scheme provides reimbursement of medical expenses for indoor and outdoor treatment for a maximum amount up to Rs. 5 lakhs and Rs. 25 lakhs, for ordinary cases, to non-executes and executives respectively and enhanced support in case of critical diseases such as Heart diseases, Cancer, Renal diseases and paralysis.

Social security

All employees are covered under the social security schemes of the company as below:

1. Gratuity: Employees on their retirement receive Gratuity payment up to Rs. 10 lakhs.

2. CMPF: All employees are covered under the Coal Mines Provident Fund scheme which is a contributory fund with equal shares both by employee and the company.

3. CMPS: The employees are covered under the pension scheme by which, on superannuation, they receive 25% of their basic pay and dearness allowance as monthly pension. In the event of death of the employee, the spouse and children are eligible to receive pension.

4. Employee Compensation: In the event of death/ disablement while on duty, the employees are eligible to receive monetary compensation under the Employee Compensation Act. Apart from that, the company provides additional compensation of Rs. 5 lakhs and Rs.84600 as Ex-gratia.

5. CPRMS: All employees are covered under post medical retirement scheme.

6. Life cover scheme: In the event of death of an employee while in service, the dependants of the employee are entitled to receive an amount of Rs. 112800/- under the life cover scheme.

7. Employment to dependent: In the event of death/ disablement of an employee, while in service, one of his dependants is entitled for permanent employment in the company.

Grievance Management

The company has a robust online stakeholder grievance management system to deal with the grievances of the stakeholders i.e. employees, consumers, customers and other stakeholders. Under the policy, all grievances are being addressed within 10 days and the stakeholders are informed accordingly.

Transparency

Transparency is one of the core values in Coal India Limited. The company provides value trainings to inculcate the values of the company among the employees. The company complies with the provisions of RTI Act. All the circulars/ Office Orders/ manuals/ policies/ promotion orders are being uploaded on the company's website for wide publicity and transparency. The company encourages all its employees to disclose their assets under Lokpal and Lokayukta Act by providing an online return filing system.

The above approach resulted in maintaining an excellent industrial relations in the company leading to reduction in number of strikes, production loss & man shift loss.

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