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ANNUAL REPORT 2012-13 WESTERN COALFIELDS LIMITED ( A Miniratna Company) CONTENTS Page No. 1 Board of Directors 1 2 Bankers & Auditors 3 3 Notice 4 4 Performance at a glance 6 5 Chairman's Statement 9 6 Awards and Accolades 17 7 Directors’ Report 25 8 Addendum to the Directors’ Report : 80 a) Comments of the Comptroller and Auditor General of India under section 619(4) of the Companies Act, 1956 b) Auditors’ Report and Management’s Reply 9 Balance Sheet as at 31st March, 2013 99 10 Profit & Loss Account for the year ended 31st March, 2013 100 11 Cash flow statement for the year 2012-13 101 12 Notes to Balance Sheet ( Notes 1 to 19 ) 102 13 Schedules (20 to 32) to Profit & Loss Account 121 14 Significant Accounting Policies - Note 33 129 15 Additional Notes on Accounts - Note 34 135 16 Statement of Audited Results for the Quarter and Year Ended 31.03.2013 155 WESTERN COALFIELDS LIMITED WESTERN COALFIELDS LIMITED ( A Subsidiary of Coal India Limited ) Board of Directors ( As on 27th May, 2013 ) Chairman-cum-Managing Director Shri D.C. Garg Functional Directors Shri Om Prakash - Technical Shri Sushil Behl - Finance Shri Rupak Dayal - Personnel Shri S.S. Malhi - Technical Government Directors (Part time) Dr. M.R. Anand - Economic Advisor Ministry of Coal. Shri R. Mohan Das - Director (Personnel & IR), Coal India Limited, Kolkata. Non-official Directors (Part time) Ms. Lalitha Kumar - Former IAS Officer, New Delhi Shri Vinod Somani - CA, New Delhi Shri Arun Balakrishnan - Former CMD, HPCL Dr. D. Chamdrashekharam - Professor, IIT, Mumbai Permanent Invitee(s) Shri R.D. Tripathi - Chief Operations Manager, Central Railway, Mumbai. Company Secretary Shri Rameher 1 ANNUAL REPORT 2012-13 WESTERN COALFIELDS LIMITED (A Subsidiary of Coal India Limited ) Board of Directors ( During the year 2012-13) Chairman-cum-Managing Director Shri D.C. Garg - From 01.05.2007 Functional Directors Shri B.K. Saxena - Technical ( upto 24.06.2012 ) Shri Om Prakash - Technical ( w.e.f. 01.06.2008 ) Shri Sushil Behl - Finance ( w.e.f. 01.11.2009 ) Shri Rupak Dayal - Personnel ( w.e.f. 28.09.2011 ) Shri S.S. Malhi - Technical (w.e.f. 03.03.2013) Government Directors (Part time) Shri A.K. Bhalla - Joint Secretary, Ministry of Coal, New Delhi ( w.e.f. 06.07.2010 ) Shri R. Mohan Das Director (Personnel & IR),Coal India Limited, Kolkata ( w.e.f. 28.06.2007 ) Non-official Directors (Part time) Dr. Ahindra Chakrabarti - w.e.f. 27.04.2010 Ms. Lalitha Kumar - w.e.f. 24.02.2011 Shri Vinod Somani - w.e.f. 24.02.2011 Shri Arun Balakrishnan - w.e.f. 24.02.2011 Dr. D. Chandrashekharam - w.e.f. 24.02.2011 Permanent Invitee(s) Shri S.K. Mishra - Secretary, Mineral Resources Department, Govt. of Madhya Pradesh, Bhopal (upto 18.04.2012 ) Shri Shailendra Singh Secretary, Mineral Resources Department, Govt. of Madhya Pradesh, Bhopal (w.e.f.31.05.2012) Shri Z.A. Siddiqui - Chief Operations Manager, Central Railway, Mumbai (upto 31.10.2012 ) Company Secretary Shri Rameher - ( w.e.f. 01.02.2008 ) 2 WESTERN COALFIELDS LIMITED BANKERS STATE BANK OF INDIA STATE BANK OF HYDERABAD CENTRAL BANK OF INDIA UCO BANK BANK OF MAHARASHTRA UNION BANK OF INDIA ORIENTAL BANK OF COMMERCE ALLAHABAD BANK INDIAN BANK PUNJAB NATIONAL BANK BANK OF INDIA HDFC BANK IDBI BANK DENA BANK STATUTORY AUDITORS M/S JODH JOSHI AND CO CHARTERED ACCOUNTANTS NAGPUR BRANCH AUDITORS M/S B. CHHAWCHHARIA & CO CHARTERED ACCOUNTANTS NAGPUR M/S A . S . DANI & CO CHARTERED ACCOUNTANTS NAGPUR M/S KPRK & ASSOCIATES CHARTERED ACCOUNTANTS NAGPUR REGISTERED OFFICE COAL ESTATE , CIVIL LINES , NAGPUR – 440001 3 ANNUAL REPORT 2012-13 WESTERN COALFIELDS LIMITED Ref : WCL/SECY/BD/AGM-38/2013/190 Date : 19th May, 2013 N O T I C E THIRTY EIGHTH ANNUAL GENERAL MEETING Notice is hereby given that the Thirty Eighth Annual General Meeting of Western Coalfields Limited will be held at 10.00 A.M. on Monday, the 27th May, 2013 at the Registered Office of the Company at Coal Estate, Civil Lines, Nagpur to transact the following business : ORDINARY BUSINESS: 1. To receive, consider and adopt the Audited Balance Sheet as on 31st March, 2013 and Profit & Loss Account for the year ended 31st March, 2013 together with the Directors’ Report and Reports of the Statutory Auditors & Comptroller and Auditor General of India thereon. 2. To declare dividend. 3. To appoint a Director in place of Dr. M.R. Anand, who retires in terms of Article 33(e)(iii) of the Articles of Association of the Company and is eligible for re-appointment. 4. To appoint a Director in place of Shri R. Mohan Das, who retires in terms of Article 33 (e) (iii) of the Articles of Association of the Company and is eligible for re-appointment. By order of Board of Directors FOR WESTERN COALFIELDS LIMITED Sd/- ( Rameher ) Sr. Manager (Finance)/ Company Secretary Registered Office : Coal Estate, Civil Lines, NAGPUR - 440 001 NOTE : 1. A member entitled to attend and vote at the meeting is also entitled to appoint a proxy or proxies to attend and vote instead of himself/herself and such proxy need not be a member of the Company. In order to be effective, the Proxy form duly completed should be deposited at the registered office of the Company not less than forty-eight hours before the scheduled time of the Annual General Meeting. A proxy form is enclosed. Contd..... 4 WESTERN COALFIELDS LIMITED 2. Members are also requested to accord their consent for convening the meeting at a shorter Notice under section 171(2)(i) of the Companies Act, 1956. To, 1. Members/Shareholders, Western Coalfields Limited 2. Statutory Auditors, Western Coalfields Limited 3. Chairman, Audit Committee, Western Coalfields Limited Copy to All Directors, Western Coalfields Limited, Nagpur Company Secretary, Coal India Limited, Kolkata General Manager (Finance) I/C-I WCL, Nagpur 5 PERFORMANCE AT A GLANCE 6 PERFORMANCE AT A GLANCE 7 PERFORMANCE AT A GLANCE 8 WESTERN COALFIELDS LIMITED Chairman’s Statement Friends, I feel great pleasure in reporting another robust year for Western Coalfields Limited, at the 38thAnnual General Meeting of the company. We reported strong top line, that is revenues of Rs. 8703.97 crores along with sturdy bottom line, that is pretax profit of Rs. 428.87 crores during the financial year 2012-13. I am happy to share that we are well positioned among the coal producers in the country on the strength of our strong balance sheet and sturdy performance year after year, despite the challenges posed by adverse geo mining conditions, paucity of reserves amenable to mega projects, constraints in land acquisition/physical possession, delay in forestry/environment clearances, the highest stripping ratio among all the subsidiaries of CIL, strata control problems due to adverse geo tectonic parameters and high susceptibility of coal to spontaneous heating/fire in underground mines. Vision The XIIth plan document envisages,GDP growth of 9% per year, with 6.5% annual growth in energy supply and the demand of 980.50 million tonnes of coal was projected to meet the 55% of the total primary commercial energy requirement in terminal year 2016-17. At Present 58.3 % of the total installed power generation capacity in the country is coal based whichcontributed for 75.83% of the total electricity generation during 2012- 13.It is a matter of fact that exponential rise in Coal demand has resulted in negative coal balance and accordingly coal industry needs to re-orient its production plan for minimizing the demand supply gap. Keeping the fact in the mind, WCL has set its vision to emerge as a key player in the primary energy sector committed to provide energy security to the country by attaining environmentally and socially sustainable growth through best practices from mine to market. Performance 2012-13 Financial Year 2012-13 had been a year full of challenges but the undeterred WCL team with concerted efforts achieved coal production of 42.29million tonnes against last year’s 43.11million tonnes and the REtarget of 42.00 million tonnes. The performance was affectedmainly due to the factors that were beyond our control such as delayin acquisition/physical possession of land, forestry clearances, lease renewal and adverse geo-mining conditions. 9 ANNUAL REPORT 2012-13 The coal off-take during the current fiscal was 41.546 million tonnes as against last year’s actual of 41.967 million tonnes and the RE target of 42.00million tonnes. The shortfall in off-take was mainly due to inadequate lifting of coal by MAHAGENCO through captive mode (rope/MGR), and road mode against allocations. Non fructification of cost plus agreement due to the failure of MAHAGENCO to achieve milestones as per LOA in respect of Bhusawal/Parlipower housesled to less offtake from Ukni and Bellora- Naigaon cost plus mines and accretion of coal stock. However, Coal desptaches through rail have registered appreciable growth as WCL has despatched 21.37 million tonnes coal through rail mode as against the AAP target of 19.05 million tonnes and last year’s actual of 18.28million tonnes registering an achievement of 112% of target & a growth of 16.9% over last year.The wagon loading was 15 rakes/ day as against AAP target of 15 rakes/ day with a growth of 16% over last year. During 2012-13 WCL achieved growth in coal despatches to core sector industries viz. 2.6% in Power, 11.8% in Cement, 6.5% in Steel, 5.7% in Sponge Iron and 10.1 % in Captive power plants. The sales realization during current fiscal had been Rs.