There seems good news brewing up for the coal consumers of the state-run Coal India Limited (CIL), and at the same time bad news also is in store for the workers of the world’s largest coal miner.
With the impeding entry of private players into the Indian coal mining space, CIL is gearing up to withstand the tough competition to proliferate after the actuation of the commercial coal mining in the country.
CIL is banking on the price game as its foremost strategy to tackle with the speculated competitive atmosphere with private players operating with advanced technology know-how and other tactics. Towards this initial move, CIL has decided to leverage on technology to increase production and keep the coal prices lower than the private peers. Moreover, the coal prices to be offered by the private players will be considered as the benchmarks for each coal category, as decided by CIL.
In parallel to the decision to lower its coal prices the coal major also has decided to implement cost cutting measures lower its cash out-go. To implement this step, CIL has decided to lower its 280,000 strong workforce by eliminating around 12,000 workers every year to trim labor costs, which account for about 55% of the total cost of production. And instead, investments will be made on automation and mechanization to achieve higher efficiency in coal production that will help in keeping the coal prices low.
While preparing a blue print of its game plan to deal with the fierce competition with the advanced private players, CIL also has finalized shutting down 40 odd unviable underground coal mines, which account for less than 10% of its coal production and substantial number of workers are deployed, to save costs.
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