Coal India Limited : CIL is central to India’s energy planning and plays a key role in India’s growth story

By Mukesh Agrawal | Director (Finance) | Coal India Limited

Formation of CIL

With the Government identifying coal as the prime commercial energy source in early the near total notional control of coal mines in India took place in two stages in 1970s. The Coking Coal Mines (Emergency Provisions) Act 1971 was promulgated by Government on 16 October 1971 under which, except the captive mines of IISCO, TISCO, and DVC, the Government of India took over the management of all 226 coking coal mines and nationalized them on 1 May, 1972. Bharat Coking Coal Limited (BCCL) was thus born.

Further by promulgation of Coal Mines (Taking over of Management) Ordinance 1973 on 31 January 1973 the Central Government took over the management of all 711 non-coking coal mines. In the next phase these mines were nationalized with effect from 1 May 1973 and a public sector company named Coal Mines Authority Limited (CMAL) was formed to manage these non-coking mines.

A formal holding company in the form of Coal India Limited was formed on 1 November 1975 to manage both the companies (BCCL and CMAL).

CIL – Corporate Structure

Today, Coal India Limited (CIL) spearheads India’s coal production and accounts for 78% of the country’s total output in an energy economy which is predominantly coal driven. It is the apex bodyunder which seven coal producing subsidiaries and one mine planning and consultancy function. CIL’s operations are spread across 8 provincial states of the country. While the coal producing entities are Eastern Coalfields Limited (West Bengal), Bharat Coking Coal Limited (Jharkhand), Central Coalfields Limited (Jharkhand), Western Coalfields Limited (Maharashtra) South Eastern Coalfields Limited (Chhattisgarh), Northern Coalfields Limited (Madhya Pradesh), Mahanadi Coalfields Limited (Odisha) the mine consultancy company Central Mine Planning and Design Institute is located in Jharkhand.

CIL is also expanding its portfolio, through diversification initiatives, into solar power generation, setting up of pithead based thermal plant, coal gasification through joint ventures and foraying into critical minerals. The company had already bagged a graphite block in Madhya Pradesh competing in auction. Bharat Coal gasification and Chemicals Limited, a JV of CIL and BHEL has been incorporated in May 2024 to take up Coal gasification project at Odisha.CIL’s aim is to retain its energy leadership in future as well and increase indigenous availability of energy source aligning with the government’s Atmanirbhar commitment. Concurrently, CIL is committed to take domestic coal production into higher orbit to reduce expensive import of coal.

Importance of CIL

As a state owned Maharatna coal mining monolith CIL plays a pivotal role in the energy security of the country. In India, where nearly 70% of the electricity generation is coal based, around 80% of CIL’s entire supplies are directed to the domestic coal based power plants. In India, CIL virtually empowers the power sector. Importantly, CIL ensures that citizens get power at a just price because CIL’s coal prices are highly competitive compared to global coal prices for similar grade of coal.

CIL is also one of the largest contributors to the government exchequer – both Centre and State – through dividend, royalty and a slew of other taxes. During FY 2023-24 the same was in excess of Rs.60,000 Crores. Touching the lives of the countrymen in more ways than one

CIL is also among the biggest spenders on Corporate Social Responsibility. along with its subsidiaries has utilized close to Rs. 655 Crores on CSR expenditure in FY 2023-24 against the statutory requirement of around Rs. 548 crore, that is, 120% target achievement.Since FY 2014-15, the first year of statutorily mandated CSR, CIL has spent more than Rs. 5,579 Crores on this account till FY 2023-24. Interestingly, for the past five financial years, till FY 2023-24 CIL has consistently moved past Rs.500 Crores mark while meeting its societal responsibility

CIL is central to India’s energy planning and plays a key role in India’s growth story.

Growing Performance

Having breached the 700 Million Tonne (MT) production mark for the first time in FY 2023, CIL produced 773.6 MTs of coal in FY 2024 registering 10% growth over a high base of 703.2 MTs of FY 2023.  This is the first instance that the company recorded double digit growth in two successive years since its inception. In volume terms the output expanded by 70.4 MTs the second ever yearly high.

In previous two financial years (2024 and 2023) CIL has increased its production by 151 MTs. This was higher by 22.6 MTs than the combined increase of 128.4 MTs achieved in six years from FY 2016 till FY 2022.

Coal to continue its dominance

NITI Aayog and independent international agencies estimate that coal’s use in India is set to peak by 2030. It will remain there for another decade despite India growing fastest in renewable energy capacity among major economies of the world. CIL has a greater role to play in the next two decades at the least. The company is committed to mine its coal in an eco-friendly manner with safety of its miners, mines and machines as a top priority. CIL’s production and off-take are pegged at 838 MTs for FY 2025.   

CIL’s Vision

CIL’s vision is to ensure that there is no shortage of coal in the country and to make the country self-reliant in terms of coal. Coal India envisions to be a commercially viable Company and endeavours to move ahead as a contemporary, professional, consumer friendly and successful corporate entity committed to national developmental goals. The vision also extends to dedicate to the service of the countrymen in providing the primary commercial energy in an affordable and environment-friendly manner. Coal India aims to be not only a valued Company, but a Company of values.

(Shilpa Bichitra | Special Edition | 2024)