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Perspective Management

Coal India Ltd 

Prof. Vijay Shahane

Diana Daniel JacobRoll no: 19

MMS 1st YearCoal India Limited (CIL) is a PSU of the Government of India headquartered inKolkata, India and the world's largest coal miner. CIL’s initial public offering of 

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Rs.15,200-cr is set to become a global industry benchmark. Global coal producers are

currently quoting at a price to earning (PE) multiple of 17-24 times. As per expected

 price band of Rs 225-245, CIL’s PE ratio works out anywhere between 14 and 17 timeson an earnings per share (EPS) of Rs 15.6 for 2009-10. The pricing of CIL issue is thus

very competitive, attracting increased retail investors and supporting the

Government’s aim of disinvestment and helping it raise Rs. 14,000-15,210 crore i.e.more than a third of its target of Rs. 40,000 in the upper price band.

Vision

To emerge as a leading global player in the energy sector by adopting best practices from

mine to market to company’s policies with emphasis on responsibility towards the

employees’ safety, competitive stakeholders’ return and sustainable development of the

society akin to a professional organization.

Mission Statement

Cater the increasing demand of coal sufficiently, efficiently and economically with due

regard to safety, conservation, quality and value.

SWOT Analysis

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Strengths:

Financially profitable, debt free, financially sound company who always pursued

a strategy aiming at physical volume growth.

Cost competitive advantage over international players since nearly 90% of its

 production is from open cast mines and has low stripping ratios. Coal India’s near-monopoly position, market-linked sales and strong secondary

markets.

Strong cash generation and very low gearing.

Weaknesses

Operations of CIL are subject to various risks inherent to mining activities. But,they don’t maintain insurance coverage in accordance with applicable industry

standards and any failure to comply with such requirements in a timely manner 

may adversely affect its operations. Its public sector mindset.

Opportunities

Indian Coal Demand to Grow at a CAGR of 11% by FY 2013.

Increasing Global energy demand.

Threats

Stricter emission norms.

Severe competition from natural gas.

The deregulation in the electricity industry has also resulted in pricing pressures.

Delays in regulatory approvals, such as forest clearance.

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Delphi Technique

Delphi Panel

Member of Coal Ministry, India

Environmentalist Senior Government official (Energy sector)

Member of Planning Commission

Heads of CIL’s other subsidiaries

Questionnaire

1. How to tackle inter-fuel competition?

2. How to safeguard market share from increasing unrestricted competitionfrom the private sector?

3. Impact of Government policies in the energy sector?

Scenario Planning

a. Surging energy demand b. Supplies will struggle to keep up

c. Stresses on the environment are increasing thus increasing use of renewable

sources of energy

While abundant coal exists in many parts of the world, transportation difficulties and

environmental degradation ultimately pose limits to its growth.

Clean Coal technologies (technology and innovation) to reduce harmful emissions,

improvements in coal-mining operations, technology to help operate in new, challenging

environments and squeeze more from existing resources due to dwindling supply.