Finding its feet

Calcutta, Sept. 24: Eastern Coalfields Ltd may shed its sick industry status earlier than anticipated.

The company, a Coal India subsidiary, was referred to the Board for Industrial and Financial Reconstruction (BIFR) in 1999 for a second time. It had drawn up a revival plan with 2010-11 as the turnaround deadline.

“But we are confident of getting out of the BIFR in 2007-08,” ECL chairman and managing director D. Chakravorty said.

“We have made a profit of Rs 363.86 crore in 2005-06 against a projected Rs 81 crore in our revival plan,” he added.

The company’s negative net worth was Rs 3,033 crore on April 31 against Rs 3,300 crore a year ago. “We are targeting a profit of Rs 607 crore this year on an increased coal production of 33.70 million tonnes (mt) and a liquidation of stocks,” Chakravorty said.

He added the company could post a 153.57 per cent jump in profit following a 14.18 per cent increase in coal production. It produced 31.11 million tonnes (mt) of coal in 2005-06 compared with 27.25 mt a year ago.

“If we earn a Rs 400-crore profit in 2007-08, our negative net worth will come down to Rs 2,000 crore. If that happens, Coal India Limited (CIL) will convert its Rs 1,532-crore loan into equity and CIL has already agreed to write off its Rs 519-crore loan if we could progress according to the revival plan. Therefore, we will be able to come out of BIFR by 2006-07,” Chakravorty said.

Meanwhile, the CIL subsidiary is focusing more on outsourcing and reducing its manpower to 90,000 by 2007-08 from about 1,05,000 now. ECL has signed up US-based continuous mining equipment manufacturer JOY for three machines to produce 0.42 mt of coal every year from its outsource patches in Jhajnra.

“Coal production from these machines will start from January,” Chakravorty said. The cost of this five- year project has been earmarked at Rs 80 crore.

“We have also invited bids from global players to supply longwall equipment for coal mining at our Jhajnra collieries. The project specification is that the bidder would have to produce 1.7 mt of coal every year. The project, spanning over 10 years, will cost around Rs 200 crore,” he said.

The company outsources coal from nine locations, which it wants to increase to 17. It has also decided to close down 26 mines as they have become uneconomical and unsafe.