Coal India Limited : Coal India signs MoU with Government

COAL INDIA LIMITED

PRESS BRIEF
24 April, 2012

Coal India signs MoU with Government

Coal India Limited (CIL) the coal miningMaharatnaPSU on 23 April 2012 signed the Memorandum of Understanding (MoU) with its administrative ministry - Ministry of Coal - for its key performance areas for the fiscal 2012-13. Mr. Aloke Perti, Secretary to Government of India, Ministry of Coal and Ms. Zohra Chatterji, CMD, CIL signed the document in Delhi.

As per the MoU for the fiscal 2012-13, CIL's targeted production and coal off-take have been fixed at468.74 Million Tonnes (Mts) and 474.70Mts respectively for attaining an'Excellent'rating. In 2010-11, CIL was rated 'Very Good', because of various constraints for starting new projects in time and heavy monsoon proved detrimental for achieving desired level of coal production. However, in three fiscals of 2007-08, 2008-09 & 2009-10, CIL was rated'Excellent'. Under the present MoU for 2012-13 special emphasis on Research & Development, Corporate Social Responsibility, Sustainable development, Human Resource Management & Corporate Governance have been made major thrust areas. To attain the targeted off-take for 'excellent' rating, CIL has sought 193.3 rakes/day for 2012-13 against the average availability of 161.9 rakes/day in 2010-11 and about 168 rakes/day during 2011-12. Average growth of coal movement through Rail was only around 3% during the last 3 years whereas CIL has envisaged a growth of around 12.6 % through rail for achieving above target.

In 2010-11, expenditure on CIL's R&D activities has taken a quantum jump to Rs.30 Crores annually from a level of around Rs. 10 Crores to Rs.15 Crores annually in previous years. Target for expenditure on R & D activities for 2012-13 as per DPE's guideline has been kept 1% of PAT of previous year (Around Rs 100 Crs). In case of CSR, target for expenditure has been set as 0.5% of PAT of previous year for CIL stand alone. In case of subsidiaries companies of the coal major separate target has been set depending on their profits as per DPE's guideline.

The component of performance obligation mainly consists of Financial & Non Financial parameters which carry equal weight of 50% each. The key parameters are gross margin, gross sales, financial ratios, quality of coal, coal production, off-take & productivity, customer satisfaction, HRD (training policy etc), safety (fatality/Mt) and environmental management etc.

MoU, formulated on the guidelines laid down by Department of Public Enterprises, is a negotiated agreement and contract between Government and the Management of Central Public Sector Enterprise (CPSE) to evaluate the performance of the CPSE at the end of the year vis- a-vis the targets fixed in the beginning of the year.