C
C
C
OAL
OAL
I
I
NDUSTRY
NDUSTRY
I
I
N
N
I
I
NDIA-
NDIA-
A
A R
R
EVIEW
EVIEW
Coal
Coal Mining first stMining first staarted in Indirted in Indiaa in the yein the yeaar 1815. The privr 1815. The privaate te R R aaiilwalwayy
Com
Com p paanies stnies staartedrted mminingining acactivities in the yetivities in the yeaar 1850. The R r 1850. The R aaiilwalway y BBoaoardrd
N
Naatitioonnalalized theized the coalcoal mmining in 1925. The R ining in 1925. The R aaiilwalwayy collcollieriesieries wwere tr ere tr aansferred tnsferred too
the
theCoalCoalBBoaoard in the yerd in the yeaar 1944.r 1944.
Coal
Coal mmining thr ining thr ouough gh nnaatitioonnalal seseccttoor first str first staarted fr rted fr omom 01.10.195601.10.1956 wwith theith the
est
establablishishmmentent oof f NNaatitioonnalal CoalCoal DeveDevelolo p pmment. After Nent. After Naatitioonnalalizizaatitioonn oof f NNoon-
n-Cok
Cok inging CoalCoal seseccttoor in 1973 Nr in 1973 NCCDDCC b beecomcome thee the CCentr entr alal DivisiDivisioonn oof f CoalCoal MinesMines
A
Auuththoority Ltd. Agrity Ltd. Agaain in the yein in the yeaar 1975r 1975 wwith the re-ith the re-oorgrgaaniznizaatitioonn oof f CCMALMAL aass CoalCoal
Indi
Indiaa Ltd.Ltd. CCentr entr alal DivisiDivisioonn oof f CCMALMAL wawass k k nnowownn aass CCentr entr alal CoalCoalfiefiellds Lids Limmitedited
(
(CCCCL).L).
CC
CCLLwawass aaggaain re-in re-oorgrgaanized in the yenized in the yeaar 1986r 1986 aand tnd twowo sepsepaar r aatete comcom p paaniesnies k k nnowownn
a
as s NNoorthernrthern CoalCoalfiefiellds Lids Limmitedited aand nd MMaahhaannaadidi CoalCoalfiefiellds Lids Limmitedited camcame inte intoo
existen
C
C
OAL
OAL
I
I
NDUSTRY
NDUSTRY
I
I
N
N
I
I
NDIA-
NDIA-
A
A R
R
EVIEW
EVIEW
Coal
Coal Mining first stMining first staarted in Indirted in Indiaa in the yein the yeaar 1815. The privr 1815. The privaate te R R aaiilwalwayy
Com
Com p paanies stnies staartedrted mminingining acactivities in the yetivities in the yeaar 1850. The R r 1850. The R aaiilwalway y BBoaoardrd
N
Naatitioonnalalized theized the coalcoal mmining in 1925. The R ining in 1925. The R aaiilwalwayy collcollieriesieries wwere tr ere tr aansferred tnsferred too
the
theCoalCoalBBoaoard in the yerd in the yeaar 1944.r 1944.
Coal
Coal mmining thr ining thr ouough gh nnaatitioonnalal seseccttoor first str first staarted fr rted fr omom 01.10.195601.10.1956 wwith theith the
est
establablishishmmentent oof f NNaatitioonnalal CoalCoal DeveDevelolo p pmment. After Nent. After Naatitioonnalalizizaatitioonn oof f NNoon-
n-Cok
Cok inging CoalCoal seseccttoor in 1973 Nr in 1973 NCCDDCC b beecomcome thee the CCentr entr alal DivisiDivisioonn oof f CoalCoal MinesMines
A
Auuththoority Ltd. Agrity Ltd. Agaain in the yein in the yeaar 1975r 1975 wwith the re-ith the re-oorgrgaaniznizaatitioonn oof f CCMALMAL aass CoalCoal
Indi
Indiaa Ltd.Ltd. CCentr entr alal DivisiDivisioonn oof f CCMALMAL wawass k k nnowownn aass CCentr entr alal CoalCoalfiefiellds Lids Limmitedited
(
(CCCCL).L).
CC
CCLLwawass aaggaain re-in re-oorgrgaanized in the yenized in the yeaar 1986r 1986 aand tnd twowo sepsepaar r aatete comcom p paaniesnies k k nnowownn
a
as s NNoorthernrthern CoalCoalfiefiellds Lids Limmitedited aand nd MMaahhaannaadidi CoalCoalfiefiellds Lids Limmitedited camcame inte intoo
existen
Coal India Li
Coal India Limited ±A PROFILE
mited ±A PROFILE
Coal India Limited
Coal India Limited ((CILCIL) is) is aa ppublubliicc seseccttoor r uundertndertak ak inging oof the Indif the Indiaan Gn Goovernvernmment. It isent. It is the
the wowor r lld'sd's lalargestrgest coalcoal mminer. It isiner. It is owowned entirened entirellyy b by the Uniy the Unioon Gn Goovernvernmment,ent, uunder thender the aaddmministr inistr aativetive cocontr ntr olol oof the Ministryf the Ministry oof f CoalCoal. It is inv. It is invololved inved in coalcoal mminingining aandnd pr
pr oodducuctitioon indn induustry.stry.
Coal
Coal IndiIndiaa LiLimmited (ited (CCIL) isIL) is aa SScchedhedulule 'A' 'Ne 'A' 'Naavr vr aatntnaa' ' PPublubliicc SeSeccttoor Undertr Undertak ak inging uunder nder Ministry
Ministry oof f CoalCoal, G, Goovernvernmmentent oof Indif Indiaa,, wwith Heith Heaadqdquauarters in K rters in K olkaolkattaa, West Beng, West Bengalal.. CCILIL is the sing
is the singllee lalargestrgest coalcoal pr pr oodducucinging comcom p paany in theny in the wowor r lldd aand thend the lalargestrgest cocorprpoor r aatete eemm p ploloyer in theyer in the coucountryntry wwithith mamanpnpowower er oof 409,332 (f 409,332 (aass oon n 1 1 JJululy 2009). With pr y 2009). With pr oovenven coal
coal reservesreserves oof 105.82 Bif 105.82 Billlliioon Tn Toonnesnnes ououtt oof tf toottalal reservesreserves oof 267 Bif 267 Billlliioon Tn Toonnes (nnes (aass oonn 1 Apri
1 Aprill 2009)2009) CoalCoal IndiIndiaa pplalaysys aa pivpivoottalal r r olole in Indie in Indiaan energy sn energy sccenenaaririoo..
C
CILIL cocontrintri bu butestes aar r ououndnd 85% of coal production in India85% of coal production in India; it is the; it is the lalargestrgest comcom p paany inny in the W
the Woor r lld in ter d in ter mmss oof f coalcoal pr pr oodducuctitioon. n. EEmm p ploloys neys neaar r lly 4.25 Ly 4.25 Lak ak h persh persoonsns aand is thend is the la
largestrgest cocorprpoor r aate te eemm p ploloyer in theyer in the coucountry. It isntry. It is oonene oof thef the lalargestrgest ComCom p paanies in thenies in the cou
country, tntry, tuurnrnoover ver b beingeing aar r ouound Rs. 386.31nd Rs. 386.31 b biilllliioon in 2007-08. It isn in 2007-08. It is oonene oof thef the lalargest trgest taaxx p
paayers (yers (CoCorprpoor r aate te TTaax Rs.35.75x Rs.35.75 b biilllliioon) in 2007-08n) in 2007-08 aand nd hhaas s ppaaid Dividendid Dividend oof Rs17.054f Rs17.054 Bi
Billlliioon tn too the Gthe Goovt.vt. oof Indif Indiaa in 2007-08.in 2007-08.
VISION:
VISION:
TToo eemmerge fr erge fr omom the pthe poositisitioonn oof f ddomomestiesticc lleeaader tder too lleeaading gding globallobal pplalayer in the energyyer in the energy se
seccttoor r b byy aaddoo pting pting b best pr est pr acactiticces fr es fr omom mmine tine too mamar r k k etet wwith dith duuee cacare tre too envir envir oonnmmententalal aandnd ssocociialal ssuustenstenaanncce.e.
MISSION:
MISSION:
PrPr oodducuce the pe the plalanned qnned quauantityntity oof f coalcoal effiefficcientientllyy aand nd eecoconnomomiicallcallyy wwith dith duue rege regaard rd ttoo ssaafety,fety, coconservnservaatitioon & qn & qualuality.ity.
Coal India Limited
Coal India Limited wawas s f f oor r mmeded oonn 2121stst October, 1975October, 1975 aass aa hhololdingding comcom p paanyny wwith fiveith five ssububsidisidiaaries:ries:
y
y BhBhaar r aatt Cok Cok inging CoalCoal LiLimmited (Bited (BCCCCL),- DhL),- Dhaann ba badd y
y CCentr entr alal CoalCoalfiefiellds Lids Limmited (ited (CCCCL), -R L), -R aanncchihi y
y WesternWestern CoalCoalfiefiellds Lids Limmited (Wited (WCCL),- NL),- Naagpgpuur regir regioonn y
y EEaasternstern CoalCoalfiefiellds Lids Limmited (Eited (ECCL),- AsL),- Asaansnsolol y
y CCentr entr alal Mine PMine Plalanningnning aand Design Institnd Design Instituute Lite Limmited (ited (CCMPDIL), -R MPDIL), -R aanncchihi
Several years later, FOUR more subsidiaries were added: Several years later, FOUR more subsidiaries were added:
y
y MMaahhaannaadidi CoalCoalfiefiellds Lids Limmited (Mited (MCCL), -R L), -R aulk aulk eelala y
y SSououth Eth Eaasternstern CoalCoalfiefiellds Lids Limmited (SEited (SECCL), -BiL), -Bilalaspspuur r y
y N Noorth Erth Eaasternstern CoalCoalfiefiellds Lids Limmited (NEited (NECCL), -direL), -direccttllyy uunder nder cocontr ntr olol oof f coalcoal IndiIndiaa
lliimmitedited
y
y N Noorthernrthern CoalCoalfiefiellds Lids Limmited, Singr ited, Singr aulauli (Ni (NCCL), -Singr L), -Singr aulaulii
The perf
The perf o
or
r ma
man
ncce ev
e evalua
aluati
tio
on is
n is ba
based
sed o
on its
n its aann
nnual
ual perf
perf o
or
r ma
man
ncce.
e.
PERFORMANCE RATING:
PERFORMANCE RATING:
The perf
The perf oor r mamanncce r e r aating is dting is doone in the f ne in the f ollowollowinging waway:y:
5%5% momore thre thaan the tn the taarget rget -- -- ExExcceellllentent
EqEqualual ttoo the tthe taarget rget -- -- Very Very GGoooodd
5%5% lless thess thaan the tn the taarget rget -- -- GGoooodd
10%10% lless thess thaan the tn the taarget rget -- -- FFaair ir
15%15% lless thess thaan the tn the taarget rget -- -- PPoooor r
CIL Board has the fo
CIL Board has the following members:
llowing members:
CChhaair ir mamann CCILIL
FFuunncctitioonnalal DireDireccttoor r
C
ENTRAL
C
OALFIELDS
L
IMITED (CCL),
R
ANCHI,
J
HARKHAND
Introduction Of CCL:
Central Coalfields Limited (CCL) is a subsidiary of Coal India Limited (CIL) a Government of India undertak ing. CCL managing the nationalized coal mines of Centr al division of Coal Mines Authority. CCL Notified as a Mini Ratna status in 2007. Its Registered and Corpor ate office is "Dar bhanga House", R anchi, Jhar k hand.
Presently CCL has:
Number of Mines 63 Mines
(26 Undergr ound & 37 Opencast mines)
Washeries 7 Washeries
4 Medium Cok ing Coal Washeries 3 Non-Cok ing Coal Washeries
Wor k sho p 1 Centr al Wor k sho p,5 Regional Wor k sho p (The Centr al W/S & 3 Regional W/S are ISO 9001)
Oper ating Coalfields
6 (East Bokar o, West Bokar o, North K ar anpur a , South K ar anpur a, R amgarh & Giridih)
Coal Reserves (up to 600 meter)
Medium Cok ing Coal 14.023 B.T.
Non-Cok ing Coal 19.539 B.T.
Total Reserve 33.562 B.T.
Pr oved 16.006 B.T.
(48% of total reserve)
CCL is having 940 cr. Issued ca pital. Its main f unctions are PRODUCTION and SALE of coal.Appr ox 90% of the total coal is sold on credit basis mainly to the public sector units, such as PSEB, HSEB, DVC, NTPC, JSEB, UPRVUNL, TVNL, SAIL etc. and remaining 10% on cash basis mainly to private sector units.
CCL has played a major r ole in socio-economic gr owth of Jhar k hand region. In 47 years of its existence it has virtually br ought out develo pment in many backward areas thr ough its mining activities, em ployment o pportunities and reaching basic infr astr ucture to
sever al remote and inaccessi ble areas. CCL also strive to hel p in establishing Coal based industries in this region and also to reach coal as domestic f uel to homes with an
objective of im pr oving f orest cover.
MAJOR CONSUMERS OF CCL
A. Power Houses :
Jhar k hand State Electricity Board Bihar State Electricity Board Damodar Valley Corpor ation N.T.P.C.
P.S.E.B.
G.S.E.B.
Delhi Vidyut Board
B. Steel Plants:
SAIL VIZAG Steel TISCOC. R ailways
D. Government Parties:
Defence H.E.C.E. Private Parties:
Lemo Cement Com pany
Indian Aluminium Com pany Ltd. Tata Sponge Ir on Ltd.
National Fertilizer Limited, etc.
Coal Types :
Chemically µCoal¶ is made of car bon, hydr ogen, oxygen, nitr ogen and some other im purities. The main constitutes of coal are:
Car boneous Non- Car boneous
Vitarin Ash
Clarin Moisture
Volatile matter Fixed Car bon
Basically Coals are Four types: 1) Anthr acite
2) Bituminous 3) Lignite
4) Peat
CCL is mainly concerned with bituminous coal. These are mainly of two types:-1) Cok ing coal
2) Non- cok ing coal
Coking coal is that variety of coal which contains less per centage of ash and has high heat value. It can be converted into hard cok e which is suitable f or ir on and steel industry.
Non ±coking coal is that variety of coal which contains high per centage of ash and has low heat value.
METHOD OF EXTRACTION OF COAL
Coal is obtained fr om the earth¶s surf ace called mines. Mines are of two types:
1)
OPENCAST MINES:
In this type of mine, attem pt is made to reach the level of coal seam with the hel p of technology, by removing the over burden (i.e. after removing everything lying above the coal seam). For this heavy machines lik e HEMM (Heavy Earth Moving
Machine) are used and the manpower is reduced.
2)
UNDERGROUND MINES:
In this type of mine technology attem pts to reach the coal seam not by removing the over burden but thr ough a pit. These mines are in those areas where the coal seam is deep. The over burden remains intact and the wor k ers dig the gr ound.
The wor k ers are sent to the level of coal seam either thr ough shaft (an inclination) or thr ough lift i.e. DOLI. There is o ptimum utilization of manpower in these mines.
In this type of mines, there is high risk of accidents due to the f all of r oofs and sides. In order to avoid these accidents thr ust is given to pr ovide su pport of green r oof with
V
ISION &
M
ISSION
O
F
CCL
VISION:
"Committed to create eco-friendly mining"
y The Mission of CCL is to pr oduce and mar k et the planned quantity of coal and
coal pr oducts efficiently and economically with due regard to safety, conservation and quality.
y The main thr ust of CCL in the present context is to orient its o per ations towards
mar k et requirements maintaining at the same time financial viability to meet the resour ce needs.
MISSION:
"To become a World class, Innovative, Competitive & Profitable Coal Mining Operation to achieve Customer Satisfaction
MAIN OBJECTIVE OF CCL:
1. Coal mining thr ough efficiently o per ated mines.
2. Besides f ulfilling coal needs of the customer in ter ms of quantity, f ocus on quality, value addition and beneficiation to the satisf action of the customers.
3. Mar k eting of coal as main pr oduct.
4. To o ptimize gener ation of internal resour ces by im pr oving pr oductivity, preventing wastage and to mobilize adequate external resour ces f or meeting investment needs. 5. To maintain high standards of safety f or accident free coal mining thr ough safe
mining pr actices and continuous safety audit and risk assessment.
6. To conserve envir onment thr ough of committed plan f or reclamation and plantation.
7. To intr oduce mass pr oduction technology lik e continuous miners etc. f or enhancing undergr ound pr oduction of quality coal.
8. To o per ate mega o pencast pr ojects using ca pacity equipment with higher availability and utilization.
9. Explor ation and pr ospecting.
10. Policy f or mulation and advisory f unction.
11. Secured thr ough long ter m Maintenance And Repair Contr act (MAR C).
12. To beneficiate coal on a substantially larger scale by adding new ca pacities and su pplying quality coal as per customer ¶s choice.
13. To pr ovide adequate number of sk illed manpower to r un the o per ations and im part technical and managerial tr aining f or u pgr adation of sk ill.
ROLE OF CCL
1. To get im plemented the policy and pr ogr am laid down by the Govt. of India. CIL ensures wor k ing in accordance with the guidelines and directions issued by them fr om time to time.
2. To k eep them inf or med of the pr ogr am to im plementation of their policies and pr ogress in accordance with the guideline and direction issued by them.
3. To plan and carryout all o per ations in such a manner that there is no risk of loss, in jury or damage to the health of wor kman.
4. To tak e care of housing, water su pply, recreational, educational, medical and
other f acilities f or the social security of em ployees to the extent it is reasonable and pr acticable.
5. To dr aw annual plans f or pr oduction, prepar ations and dispatch of coal connect activities k eeping in priority wise demand.
6. To maintain store of equipment spares and others materials to that necessary items
are available in time without unduly block ing ca pital f or purpose.
7. To install, maintain and o per ate plant and machinery pr o per ly so that they are available f or wor k ing to the maximum extent and to utilize them in the best possi ble manner.
8. To arr ange necessary f und and utilize that in the most f avor able manner.
9. To maintain har monious industrial relation.
10. To constr uct new pr ojects to meet the f uture requirements and to ensure timely communication and com pletion of jobs.
11. To ado pt techniques and methods of wor k ing such that loss by ways similar to
others reasons and blockages of reserved in barriers etc.
ORAGANISATIONAL STRUCTURE
:ADMINISTRATIVE SETUP
Shri R. K. SAHA (CMD) Shri A. Chatterjee Director(Finan ce) G.M (Finance) Cash Accounts Cost andBudgeting Tax IAD Chief (IAD) G.M
(Systems) T.K. Chand
Director(Personnel) T.K.Nag Director(T)(Operation) Director(P&P)
Ministry of coal (New delhi) CIL (KOLKATA) NCL,MCL,BCCL,ECL, WCL,SECL, CMPDIL CCL,RANCHI CORPORATE H.Q. UNIT 11 COAL PRODUCTION AREA MINES RESCUE STATION CCWD AREAS(WASH ERIES) HOSPITAL CENTRAL STORES CENTRAL WORKSHOP NEC
FINANCIAL HIGHLIGHTS OF CCL
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31STMAR CH, 2010
Schedule
FOR THE YEAR ENDED 31.3.2010 (Rs. In Lak h)
FOR THE YEAR ENDED 31.3.2009 (Rs. In Lak h)
INCOME :
Sales 1 548822.42 521088.78
Coal issued f or other purposes 2(A) 109313.21 103844.53 Accretion/Decretion in stock 3 16243.95 -6993.82 Other Income 4 50585.90 46457.60 TOTAL INCOME 724965.48 664397.09 EXPENDITURE :
Colliery consum ption 2(B) 105315.47 102017.24 Consum ption of Stores & Spares 5 50297.13 47980.00 Em ployees Remuner ation & Benefits 6 232875.99 258928.00 Social Overhead 7 20292.92 19300.53 Power & Fuel 8 26689.97 25628.66 Repairs 9 19574.04 17378.46 Contr actual Expenses 10 29276.90 31899.17 Miscellaneous Expenses 11 33608.73 37535.06 Over burden Removal Ad justment 18502.34 7198.27 TOTAL EXPENDITURE 536433.49 547865.39 GROSS OPERATING PROFIT 188531.99 116531.70 Interest 12(A) 1738.80 4351.05 Financial Charges 12(B) 185.84 330.60 Depreciation 20202.27 19005.30 Pr ovisions 13(A) 12707.82 18511.96 Write-Off 13(B) 498.67 81.52 PROFIT FOR THE YEAR 153198.59 74251.27 Prior Period Ad justment(Credit) 14 106.42 2129.12
PROFIT BEFORE TAX 153305.01 76380.39 PROVISION FOR INCOME TAX 50659.06 48341.00 PROVISION FOR DEFERRED TAX 5771.56 -22142.64 FRINGE BENEFIT TAX 0.00 1189.12 Pr ovision f or IT f or ear lier year 295.52 0.00 PROFIT AFTER TAX 96578.87 48992.91 APPROPRIATION
Gener al Reserve 15331.00 7974.00
CSR Reserve 2161.80 0.00
Pr o posed Dividend 38632.00 19597.00 Tax on Dividend 6565.51 3330.51 PROFIT UPTO THE PREVIOUS YEAR 80128.60 62037.20 BALANCE CARRIED TO BALANCE SHEET 114017.16 80128.60
BALANCE SHEET AS AT 31
STMAR CH, 2010
Schedule As at 31.3.2010 (Rs. In Lak h) As at 31.3.2009 (Rs. In Lak h) I. SOURCES OF FUNDS :1 Share Holders' Funds :
(a) Share Ca pital A 94000.00 94000.00
( b) Reserve & Surplus C 172063.96 120682.82
266063.96 214682.82 2 Loan Funds : (a) Secured 0.00 0.00 ( b) Unsecured E 11205.41 29397.58 11205.41 29397.58 TOTAL 277269.37 244080.40
II. APPLICATIONS OF FUNDS : 1 Fixed Assets :
(a) Gr oss Block F 465900.25 448490.81
Less : Depreciation 314281.44 303800.93
Net Block 151618.81 144689.88
( b) Ca pital Wor k in Pr ogress (Net) G 34304.70 31135.31 185923.51 175825.19
2 Investments H 5653.82 6596.12
3 Deferred Tax Assets 50727.97 56499.53
4 Current Assets, Loans & Advances :
(a) Inventories I 117717.53 96806.32
( b) De btors J 51244.83 74526.48
( c) Cash &Bank Balances K 260700.75 181588.39 (d) Loans & Advances L 120898.32 262270.48 (e) Other Current Assets M 16082.32 11821.78
Total Current Assets, Loans & Advances 566643.75 627013.45 Less : Current Liabilities & Pr ovisions N 531679.68 621854.11
Net Current Assets 34964.07 5159.34
TOTAL 277269.37 244080.18
SIGNIFICANT ACCOUNTING POLICY P
NOTES ON ACCOUNTS Q
BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL
BUSINESS PROFILE R
SWOT ANALYSIS OF CCL
STRENGTHS:
CCL en joy mono poly in coal pr oduction.
CCL has a sk illed and experienced manpower to assist in coal pr oduction.
CCL has got constant Government su pport and assistance as it is a com pany with Govt. undertak ing.
Availability of good infr astr ucture.
Experience of Coal pr oduction f or 34 years.
Use of heavy machineries (HEMM) and advance technology in coal mining.
WEAKNESS:
CCL has to suffer due to interference by Government.
It has heavy bureaucr acy and red-ta pism.
Attitude of manpower is negative and less motivated.
OPPORTUNITY:
CCL has long-ter m business o pportunity in coal pr oduction.
Availability of experienced manpower f or the com pany.
CCL is planning to expand its o per ations globally by investing in f oreign pr ojects.
CCL can look f or ward to pr ovide better services to its clients.
THREATS:
CCL may f ace intense com petition in f uture due to emergence of private com panies in coal pr oductions.
CCL might have reduced pr ofit and sales as a result of lack of pr oduct innovation.
The com pany may have to encounter tough challenges due to privatization of coal sector.
OBJECTIVES, SCOPE & LIMITATIONS OF THE STUDY
O bjectives of the study:
y To study and understand the current trend, pr ocedures & im plementations of
ca pital budgeting techniques at CCL.
y To analyze the tools and techniques used in preparing ca pital budget.
y To understand the nature of ca pital expenditures.
y To estimate the total ca pital expenditure requirements f or pr ojects.
y To a ppr oximate & establish the sour ces of ca pital to f und these pr ojects.
SCOPE OF THE
STUDY:-y This resear ch pr oject aims at studying and analyzing the current pr actices of
ca pital budgeting at centr al coal field ltd (CCL).
y The resear ch pr oject would hel p CCL to im plement new and better techniques of
ca pital budgeting while evaluating new pr ojects i.e. acquiring new coal mines.
y This study would hel p CCL to find out various ways to f ulfill the ca pital
requirements of the com pany.
y IT would hel p the com pany to im pr ove the pr ofitability of their pr ojects.
y This study is carried out using actual data and inf or mation pr ovided by various
sour ces at CCL. CIL has com plete mono poly in the pr oduction, tr ade and
mar k eting of coal. Hence, this study has a wide sco pe in the entire coal pr oducing com panies and other subsidiaries of Coal India Ltd. (CIL).
LIMITATIONS OF THE
STUDY:--1. Coal India ltd. accounts f or 90% of the coal pr oduction in India. It has com plete mono poly in the coal sector. Theref ore, the data used f or this study are confined to CIL and not a pplicable to any other com pany. 2. Assum ptions have been tak en regarding analysis and interpretations of
pr oject due to lack of pr o per data.
3. Certain data and inf or mation given in the resear ch are hypothesized due to highly confidential of such inf or mation.
I
ntroduction
O
f
C
apit al
B
udgeting
Capital Budgeting
An efficient allocation of ca pital is the most im portant finance f unction in the modern times.
The investment decision of a fir m are gener ally k nown as the capital budgeting, or capital expenditure decisions.
A capital expenditure is an outlay of cash f or a pr oject that is expected to pr oduce a cash inf low over a period of time exceeding one year. Ca pital budgeting consists in planning the deployment of available ca pital f or the purpose of maximizing the long-ter m pr ofitability (return on investment) of a fir m.
It is a pr ocess of evaluating and selecting long-ter m investment that is consist with the goal of share holders wealth maximization. The fir m¶s investment decisions would gener ally include expansion, acquisition, modernization and replacement of the long ter m assets.
Ca pital budgeting may be defined as the decision mak ing pr ocess by which a fir m evaluates the pur chase of major fixed assets, including buildings, machinery and equipment.
Features of investment Decisions
1. The exchange of current f unds f or f uture benefits.
2. The f unds are invested in long-ter m assets.
Importance of Investment Decisions
Investment decisions require because of the f ollowing reasons:
y They inf luence the fir m¶s gr owth in the long r un. y They affect the risk of the fir m.
y They involve commitment of large amount of f unds. y They are irreversi ble, or reversi ble at substantial loss. y They are among the most difficult decision to mak e.
Types of Investment decisions
One classification is as f ollows:
y Expansion of existing business y Expansion of new business
y Replacement and modernization.
Yet another usef ul way to classify investment is as f ollows: Mutually exclusive investments
Independent investments Contingent investments.
Investment Evaluation criteria
Three steps are involved in the evaluation of an investment: Estimation of cash f lows
Estimation of the required r ate of return
Application of a decision r ule f or mak ing the choice.
Three types
of ca pital budgeting:-(1) Accept and re ject decision. (2) Ca pital r ationing decision.
1. Accept and re ject
decision:-Pr o posal in which r ate of return is more than the invested r ate. I.e. ± output is more than input
In this all independent pr oject are accepte
d.
Independent pr oject are those which isnot
com pete with others.
2. Ca pital r ationing
decision:-Ca pital r ationing means distri bution of ca pital in f avors of more acceptable pr o posals. A fir m deter mines a certain point f or selecting accepted pr o posals.
3. Mutually exclusive choice
decisions:-Mutually exclusive investment serve the same purpose and com pete with each other.
If one investment is undertak en, other will have to be excluded.
Techniques of selecting capital budgeting proposals
Techniques gr ou ped in the f ollowing two categories:
1) Time ad justed (Discounted Cash Flow Criteria ±DCF)
a) Net Present Value Method
b) Internal R ate of Return method
c) Discounted pay back period
d) Pr ofitability Index (PI)
2) Tr aditional (Non-Discounted Cash Flow Criteria)
a) Aver age R ate of Return (ARR)
DISCOUNTED CASH FLOW CRITERIA
Net Present Value (NPV) Method:
The present value is the pr ocedure recognizing the time value of money.Cash f low streams at different time periods differ in value and can be com pared only when they are expressed in ter ms of a common denominator, i.e., present values.
The f or mula f or the net present value can be written as f ollows:
NPV =
C1
1+k)C2 2
C3 (1+k)3
Cn (1+k)n
C
0 Where,C1, C2, ««« represent net cash inf lows in year 1, 2«..,
K is the o pportunity cost of ca pital,
C0 is the initial cost of the investment and
n is the expected life of the investment
The NPV Acceptance rules are: 1. Accept if NPV>0
2. Reject if NPV<0 3. May accept if NPV=0
Exam ples- assume that pr oject X costs Rs.2500 now and is expected to gener ate year end cash inf low of Rs. 900, Rs 800, Rs 700, Rs 600 and Rs. 500 in years thr ough. The o pportunity cost of the ca pital may be assumed to be 10 %.
NPV=[Rs.900/(1+0.10)+Rs.800/(1+0.10)2+Rs.700/(1+0.10)3+Rs.600/(1+0.10)4+Rs.500/( 1+0.10)5]-2500
NPV=[818+661+526+410+310]-2500 NPV=2725-2500=Rs225
Thus,it gener ates a positive net present value (NPV= +Rs.225). Theref ore, it should be accepted.
Advantages:
Time value: It recognises the time value of money-a rupee received today is worth more than a rupee received tomorrow.
Measure of true profitability
Shareholder value: The NPV method is always consisted with the objective of shareholder value maximisation.
Di
sadvantages:
Cash flow estimation: It is quite difficult to obtain the estimates of cash flows due to uncertainty for NPV method.
Internal Rate of Return (IRR)
IRR is defined as the r ate of discount at which the present value of cash inf low and present value of cash outf low are equal.
C
1
1+r)
C
2 2
C
3(1+r)
3
C
n(1+r)
n
The internal r ate of return is defined as the discount r ate that gives a net present value (NPV) of zer o.
PV
CO-PV
CFAT)
Where,
PVCO = Present value of cash outlay
PVCFAT = Present value of cash inf lows
r = Either of the two interest r ates
¨r = Difference in interest r ates
¨PV = Difference in calculated present values of inf lows
IRR Acceptance Rule:
Accept the pr oject when, r > k Re ject the pr oject when, r < k May accept the pr oject when, r = k Where, r = internal r ate of return &
MERITS:
y Time value of money.
y Pr ofitability measure: it considers all cash f lows over the entire life of the pr oject
to calculate its r ate of return.
y Share holdes value: It is consistent with the shareholders wealth maximization
objective.
DEMERITS:
y Multiple r ates: A pr oject may have multiple r ates, or it may not have a unique r ate
of return.
Mutually Exclusive pr ojects: It may also f ails to indicate a correct choice between a mutually exclusive pr ojects.
Profitability Index
:It is the r atio of the present value of cash inf lows, at the required r ate of return to the initial cash outf low of the investment. A pr ofitability index number greater than 1 indicates an acceptable pr oject, and is consistent with a net present value greater than 0. The pr ofitability index a ppr oach measures the present value of returns per r u pee invested.
The r atio is calculated as f ollows:
R ules f or selection or re jection of a pr oject: (1) If PI > 1 then accept the pr oject (2) If PI < 1 then re ject the pr oject (3) May accept if PI=1
For exam ple,
If the initial outlay of a pr oject is Rs.1000 and it can gener ate cash inf low of Rs.400, Rs.300, Rs.500, and Rs.200 in year 1-4. We assume r ate of discount as 10%. The PV of cash inf lows at 10% discount r ate is:
Year Inf lows 10% df PV 1 400 .909 364 2 300 .826 248 3 500 .751 376 4 200 .683 137 Total PV = 1125 PI = = 1.125
Traditional/ Non-Discounted Cash Flow techniques:
Average Rate of Return:
The aver age r ate of return (ARR) method is to measure the pr ofitability of an
investment. It is based u pon accounting inf or mation r ather than cash f lows. The most common usage of aver age r ate of return (ARR) expresses it as f ollows:
ARR =
Where,
The Aver age Pr ofit After Taxes are deter mined by adding u p the after tax pr ofits expected f or each year of the pr ojects life and dividing the results by the no. of years.
The aver age investment is deter mined by dividing the net investment by 2.
Accept reject rule: this method will accept all those pr ojects whose ARR is higher than the minimum r ate established by the management and re ject those pr ojects which have ARR less than the minimum r ate.
For exam ple:
If an investment pr o posal considering a cost of Rs. 50,000 having life expectancy of 5 years and no sulvage value. Assumingthe tax r ate is 35% and the fir m uses str aight line depreciation. The estimated cash f low bef ore depreciation & tax fr om the investment pr o posal are as f ollows:
Year CFBT Depreciation PBT TAX (0.35%)
EAT
1 10,000 10,000 Nil Nil Nil
2 10,692 10,000 692 242 450
3 12,769 10,000 2769 969 1800
4 13,462 10,000 3462 1212 2250
5 20,385 10,000 10,385 3635 6750
Total EAT (Earning After Tax) =11250
ARR =
Advantages:
y It selects alternative uses of f und.
y It considers saving over the entire life of the pr oject.
y In addition to measuring the desir ability of new investments on the basis of
their relative cash f low, a com parison is made of expected pr ofitability. This is done with the aver age r ate of return, which is a r atio of the year ly aver age net earnings after depreciation and taxes to the aver age investment.
Disadvantages
y The differential timing of receipts is not considered y It ignores the time value of f unds
Payback Period Method:
The pay period method is the 2ndtr aditional method of ca pital budgeting. It is the sim ple and perha ps, the most widely em ployed quantitative method f or a ppr aising ca pital
expenditure decisions. It is defined as the number of years required . This method answers the question ³How many years will it tak e f or the cash benefits, to pay the original cost of an investment´. This method is also k nown as the pay-out method.
Payback period =
For Exam ple:
If a pr oject requires an outlay of Rs. 50,000 and yields annual cash inf low of Rs. 12,500 f or 7 years. The pay back period f or the pr oject is:
PB =
= 4 years
Advantages
(1) It is an im portant guide to investment policy. (2) It lays a great em phasis on liquidity.
(3) It is easy to understand, calculate and communicate to the other.
(4) The method enables a fir m to choose an investment which yields a quick return on cash f unds.
(5) It enables a fir m to deter mine the period required to recover the original investment with some per centage return and thus arrive at the degree of risk associated with the investment.
(6) It em phasizes the liquidity and solvency of a fir m, which is undoubtedly an im portant consider ation.
(7) It weighs ear ly returns heavily and ignores distant returns.
(8) When the pay back index is used f or r ank ing com petitive pr ojects, it has the advantage of eliminating any bias due to pr oject size in ter ms of cost.
(9) The method is quite the sim plest of all the techniques used by the industry. It hel ps in selection of those pr ojects whose pr ofits are high enough to repay the amount invested within a particular number of years.
Disadvantages
(1) The time value of money is ignored.
(2) The r a pidity of incoming cash f low is the only measure of desir ability.
(3) There is no recognition of cash f low variation. One pr oject may have cash inf low of Rs.6,000 f or the first year, Rs.8,000 f or the second year and Rs.10,000 f or the third year. The second pr oject may have cash f low of Rs.10,000 Rs.8,000 and Rs.6,000 f or three years respectively. If both the pr ojects involved net cash outlays of Rs.24,000, the pay back period would be three years of each. It should be remembered, however, that the second pr oject would yield more cash ear lier and may, theref ore, be considered more valuable. This situation is not pr o per ly handled under the pay back method.
(4) It does not indicate how to maximise value and ignores the relative pr ofitability of the pr oject.
(5) It over em phasises liquidity and ignores ca pital wastage and the economic life of an asset.
(6) It is only a r ule-of-thumb method. It is often difficult to judge objectively whether one pr o posed pr oject is su perior to another and, if so, by how much.
(7) No allowance is made f or taxation nor is any ca pital allowance made. (8) It may choose highly risk y pr oject.
C
AP ITAL
B
UDGE TING
P
R A C TICES IN
CC
L
:
The long ter m investment decisions are done in two categories :
y With respect to ca pital expenditure y With respect to pr oject selection.
CAPITAL EXPENDITURE:
A Ca pital budget or expenditure is the estimated amount required by the various
departments, pr ojects, wor k sho ps, centr al stores and headquarters itself, f or the purpose of utilizing the amount against the expenditure which are estimated in advance and are of ca pital expenditure in nature.
Ca pital budget or expenditure is contr olled by the ministry of coal, where the pr o posed ca pital budget is sent f or a ppr oval by the ministry. Based on the budgeted figure, ca pital expenditure is made.
In CCL µCAPITAL BUDGET¶ is prepared which is a manual com prising of area wise pr ojected Ca pital Expenditure, prepared firstly at area (local) level by the GM and AGM
of concerned area and then is sent to the head quarters at pr oject and planning department where these expected Ca pital budgets are com piled by the concerned officials in the same departments.
Once the Ca pital Budget is com piled & finalized, it is then issued as a year book showing area wise estimated ca pital expenditure f or each month. On the basis of these pr ojected budgets, the monthly´ µStatement of Ca pital Outlay and expenditure¶ is prepared f or each
area showing the pr ogressive expenditure of that respective month along with com paring it with the budgeted expenditure .
Regarding the payments of this Ca pital Expenditure, this is mainly done in two levels or basis :
1. At area level :
Area wise payment is done by the remittance received by the Centre or Headquarter. The payments are made on the basis of release of f unds fr om the headquarters as per the
estimations and sanctions made thereof .
2. At Central or Headquarters level:
The payment is directly made fr om centre or headquarters f or the HEMM and centr al stores at Bar kak hana.
The Ca pital Budget depends either on pr oject report or a ppr oved scheme .
The total pr oject evaluation is done by the CMPDI subsidiary com pany of the CIL, holding com pany of CCL. CMPDI prepares the detailed pr oject report and sends it to the CCL f or a ppr oval after giving sever al presentations on some im portant feasi bility aspects. CCL¶s board of directors can directly a ppr ove the pr oject u p to 500 cr ore and f or pr ojects costing more than 500 cr ore, the respected pr oject has to be a ppr oved by the ministry of coal .
As stated ear lier, the ca pital expenditure statements are prepared at regional level and also at centr al level where based on the ca pital budget the estimated and actual are com pared and per centage achievement are shown in the statement itself.
PROCEDURE FOR STARTING A NEW PROJECT
Starting a new pr oject (mine) involves com plex and elabor ate pr ocedure. These can be listed as below:Step: 1 The Area is ear mar k ed and called as a µBlock¶. For e.g. ³Magadh´. Then the area is drilled and coal reserve is pr oved. Geological Survey is done and r aw data is made available: Moisture, quality, etc.
Step: 2 Next step is to prepare a ³Draft project report´ which is done by Central Mine Planning and Design Institute (CMPDI) LTD. The dr aft report is then submitted to CCL Headquarters, pr oject & planning Department (P&P). Presentations are then given by CMPDI to the Head Of Departments (HOD) of all departments ±Excavation, Mining, Finance, etc. As per suggestion, changes and amendments are made to the dr aft PR.
Step: 3 Empower Sub Committee (ESC) is prepared. It mostly consists of Functional Directors (FD¶s) and Independent Directors. Presentations are made to them and suggestions (if any) are incorpor ated.
Step: 4 The Dr aft PR is then sent to Board Of Directors f or a ppr oval (u p to 500crs). Upto 500 Cr ores : Appr oval by BOD,CCL
500 Crs. ± 1000 Crs. : Appr oval by CIL
A bove 1000 Crs. : Appr oval by Ministry Of Coal (MoC)
Step: 5 The DPR is then sent to ESCinMinistry of Coal f or a ppr oval.
Step: 6 DPR is now sent toPublic Investment Board (PIB) and theDraft PIB Note
is prepared. The Secretary Expenditure again analyses the pr oject and thereafter recommends the pr oject f or a ppr oval (if any).
Step: 7 Cabinet Committee on Economic Affairs (CCEA) then evaluates the pr oject. A Dr aft CCEA note is prepared.
PARALLEL ACTIVITY: ADVANCED ACTION
Advance action consist of activities which are carried side by side while the pr oject is being studied and evaluated f or a ppr oval. These activities include:
i. Land Acquisition ii. Forestry Clear ance iii. PR Prepar ation iv. Initial Infr astr ucture
v. EMP Clear ance
LAND ACQUISITAION:
Acquiring land f or the mines in the primary activity which is carried out in advance by ccl.
Land is acquired under various act by CCL, which are given below:
(1) The coal bearing area (acquisistion and development)Act 1957.
Government of india acquires the land then given it to ccl/ail. This pr ocess is k nown as µvesting¶
GOVT OF INDIA Acquires land
CCL / CIL
Vesting(2) Land Acquition Act
Only non f orest land can acquired under this act. All com pensation , interest etc is paid by the state government90% of land is acquired by land acquisition act.
(3) Direct Purchase
Under this land is acquired directly by cil. These are only small portion of the pur chase as per extr a and emergency requirement of land.
FOREST CLEARANCE
Per mission has to be obtained fr om f orest department regarding acquiring of f orest land f or non- f orest purpose I e. the purpose of creating mines.
Sections²II of the Forest Conservation Act, 1980 is a pplied to acquire f orest land .It involves two stages:
STAGE 1: Principally agree with/without conditions.
Net present value of the land is calculated and the payment is made. STAGE 2: Final release of the land.
EMP CLEARENCE
Environmental Management Plan(EMP) is a pplied one month bef ore the final release of land by f orest department.
It analyses the effect of the pr oject on the f ollowing aspects envir onment and its degr adation:
y Air y Water y Noises y Land
Stage1: At this stageEOR(form-1)and the Ter m of Reference (TOR) is prepared and submitted to the Ministry Of Environment. The ministry analysis the
a pplication and then the pr oject is finalized f or Appr oval. Stage2: Public Hearing
Minutes are given by The Po pulation contr ol Board. They give there
suggestion on whether there should be any chance or no chance in the pr oject.
Then presentations are given by expert committee mining I.e. EC( M) illustr ating the pr oject¶s:
y Internal rate of return (IRR) - It should be at minimum 12%.
y Internal and extra budgetary resources (IEBR) - Gives the details of
sour ces of ca pital Investment i.e. whether the com pany has surplus money to f und this pr oject or how the investment could be f unded externally thr ough Loans, Financial Institutions etc
y Variance Analysis
y CCEA Note (Must)
Projects commissioned during the tenth Plan Period (2002-2007)
Sl.No. Name of Project Capacity (MTY) Proposed Capital Outlay (Rs. Cr.) Approval from CCL board
Govt¶s approval/Present status
1
MagadhOCP
12.00 469.78 Fe b¶2003
Appr oved by govt.
Vide letter dated 19.07.06 fr om MOC.
Pr oject is under im plementation.
2
AshokExpn. OCP
6.50 471.66 June¶03
Appr oved by Govt. vide letter dated 13.04.06 fr om MOC.
Pr oject is under im plementation.
3
K onar OCP 3.50 74.53 April¶04Appr oved by CCL Board on
12.08.06. (As per revised Delegation of power of CCL Board)
4
K ar o OCP 3.50 96.53 July¶05Appr oved by CCL Board on
12.08.06. (As per revised Delegation of power of CCL Board)
5
To pa RO 1.20 65.25-Appr oved by CIL Board on 06.03.02. Pr oject is under im plementation.
6
Amr a paliOCP
12.00 517.62 Fe b¶03
CCEA note submitted to MoC on 06.11.06
7
North Urimari OCP 3.00 179.87 May¶04 Appr oved by CCL board on 07.12.07 (as per Revised Delegation of Power of CCL board)8
Churi BentiUGP
0.81 163.51 April¶07
Appr oved by CIL Board on 27.08.07. Pr oject is under im plementation
The above 8 mining pr ojects have been commissioned during X Plan period. The total ca pacity of these pr ojects is 42.51 MTY. Out of this To pa RO OCP was sanctioned in 2002. Magadh, Ashok EPR (6.5 MTY), K ar o OCP and K onar OCP have been sanctioned in 2007-08. Pipar war Expn.(10 MTY) and Ashok Expn (10 MTY) have been a ppr oved
Major Projects of CCL
Pipar war OCP (6.50 MTY)
KDH Hesalong OCP (4.50 MTY)
R ajr a ppa OCP (3.00 MTY)
Pare j (E) OCP (1.75 MTY)
Urimari OCP (1.30 MTY)
Sel. Dhori OCP (2.25 MTY)
Jhar k hand OCP (1.00 MTY)
Future Projects
To pa OCP (1.20 MTY)
Ashok Expansion OCP (6.50 MTY) K or a Expansion OCP (3.50 MTY)
K onar OCP (3.50 MTY)
N. Urimari OCP (3.00 MTY)
Purnadih OCP (2.00 MTY)
Mega Project of 10thplan
Magadh OCP (12.0´ ) Link ed to NKTPS
Amr a pali OCP (12.0´ ) Link ed to Barha TPS
Strategy for financing or future project
y Internal Gener ation
y External f unding thr ough Financial Institutions y Bill of Tr ansfer
R
esea rch
M
ethodology
Methodology used in the study:
For carrying out this study, a lot of eff orts have been made. Thr ough
this type of vast organisation these eff orts are nor mal but not
irrelevant. It might have little use but it is not so that it has no use. So
we tried our level best f or carrying out this study and used f ollowing
methods to achieve these objectives of the study.
Primary Data
1. Personal meeting with senior finance executives.
Secondary Data
1. Analysis of past financial statement.
2. Data collected fr om various magazines and internet.
Personal meeting with senior executives:
After analysis of past records f or understanding various things it was very
im portant to meet finance executives and managers. To understand the
reason behind the increase or decrease in pr ofit it was indispensable to talk
with the person who are directly involved in this pr ocess. Theref ore, I
decided to talk with the to p officers, senior executives of the finance and
administr ation department. Thanx toall those managers and executives
whom I wished to talk ed and talk ed. They coo per ated with necessary data
and talk ed very freely with me. We talk ed about past data, present scenario
and even predicted about the f uture.
Analysis of Past Records:
Records of last years of tr ading and pr ofit and loss accounts, balance sheet
and cash f low statements of CCl are collected.
Limitation:
Primary and secondary data has been collected fr om various resour ces but it
was not easy to collect all the data due to safety reason and security
concerns. That is why some pr oblem had come in collecting data. I have
tried my best f or collecting data.
D
ETAIL
E
V ALUATION
O
F
A
P
ROJ
EC T
Economic Evaluation
Economic evaluation f or the pr oject has been pr ovided in 2 parts: A) Mine Economics
B) Integr ated Economics f or mining and coal washery
A) Mine Economics
Initial Capital investment :
In the two o ptions Department and Outsour cing o ptions, Department o ption has been considered f or o per ating this pr oject. In department o ption it has been pr o posed to o per ate the mine with departmental resour ces except f or hiring of vehicles have been pr o posed.
Total initial ca pital investment (till target in 5thyear) f or the pr oject has been estimated as Rs.1071.73 cr ores.
The ca pital investment of the pr oject is estimated on the basis of 1.5: 1- Loan: Equity R atio.
Methods of Estimation of Capital Cost:
The estimates f or the ca pital cost of HEMM and other P&M are based mainly on cost of mining equipment in Dec. 2008 ( as per CMPDI¶s Standard Price List f or Mining & Equipment). For civil estimates Building Cost Index f or the area has been
First two years are considered as constr uction period (year 1 to year 2). During year 3, there is a cash surplus. Hence, the revenue expenses f or the first two years (year 1 & Year 2) have been ca pitalized.
Estimates of Operating Cost
The details of estimated o per ating cost are given f or 100% ca pacity utilization. The aver age cost of pr oduction, f or 25 years of life of mine, at 100% of ca pacity utilization is given below:
Particulars Departmental Option
At 100% 935.27
Salary and Wages
The peak requirements of manpower f or an annual output of 4.00 Mty of coal f or Departmental Option is as 1044.
Year wise salary & wages cost u pto 25thyear of o per ations are given .
The salary & wages cost f or Departmental Option has been estimated as Rs. 97.55/t at 100% ca pacity utilization.
Stores Cost:
Year wise stores cost consists of repairs & maintenance, diesel, lubricant, explosives, and other details u p to 25thyear of o per ations.
The stores cost f or Departmental Option has been estimated as Rs.307.55/t at 100% ca pacity utilization.
Power cost:
In Departmental Option power su pply arr angements to various locations will be the responsi bility of com pany.
Year wise power bill is calculated f or the pr oject.
The power cost f or departmental o ption and has been estimated as Rs.16.97/t at 100% ca pacity utilization.
Miscellaneous expenses:
This covers the expenses on TA/DA, printing and stationary, postage, telephones, repairs, and maintenance of civil items, wor k sho p de bit f or annual servicing and overhandling of HEMM, insur ance and taxes f or vehicles, envir onment management cost including mine closure, social welf are, security outsour cing cost, vehicle hiring cost etc.
The miscellaneous expenses have been estimated as Rs. 58.94/t at 100% ca pacity utilization.
Administrative charges:
This includes area overhead and a pex overhead etc. In the departmental o ption com pany authorities will be su pervising all the mining related activities.
So the administr ative expenses f or departmental o ption has been estimated as Rs. 58.63/t at 100% ca pacity utilization.
Interest on working capital:
The r ate of interest on wor k ing ca pital is tak en as 12.5% per annum and the quantum of wor k ing ca pital has been assumed as equivalent to f our(4) months of cash o per ating
