WESTERN COALFIELDS LIMITED (A Miniratna Company) ANNUAL REPORT AND ACCOUNTS 2013-14 COAL ESTATE, CIVIL LINES, NAGPUR - 440001 WESTERN COALFIELDS LIMITED (A Miniratna Company) CONTENTS Page No. 1. Board of Directors 1 2. Bankers and Auditors 3 3. Notice - Annual General Meeting 4 4. Performance at a glance 6 5. Chairman's statement 9 6. Awards and Accolades 15 7. Directors' Report 23 8. Annexures to Directors' Report 71 9. Addendum to the Directors' Report 95 10. Balance sheet as at 31st March, 2014 118 11. Profit and Loss Account for the year ended 119 on 31st March, 2014 12. Notes to Balance Sheet (Note 1 to 19) 121 13. Notes to Profit and Loss Account (Note 20 to 32) 142 14. Significant Accounting Policies - Note 33 150 15. Additional Notes on Accounts - Note 34 156 16. Statement of Audited Results for the quarter 173 and year ended on 31st March, 2014 -------------- WESTERN COALFIELDS LIMITED WESTERN COALFIELDS LIMITED ( A Subsidiary of Coal India Limited ) Board of Directors ( As on 11th June, 2014 ) Chairman-cum-Managing Director Shri D.C. Garg Functional Directors Shri Om Prakash - Technical Shri Rupak DayaL - Personnel Shri S.S. Malhi - Technical Government Directors (Part time) Dr. M.R. Anand - Economic Adviser, Ministry of Coal, New Delhi Shri R. Mohan Das - Director (Personnel & IR), Coal India Limited, Kolkata. Permanent Invitee(s) Shri R.D. Tripathi - Chief Operations Manager, Central Railway, Mumbai. Shri S.S. Kshatriya - Addl. Chief Secretary (Revenue), Govt. of Maharashtra, Mumbai Company Secretary Shri Rameher 1 ANNUAL REPORT 2013-14 WESTERN COALFIELDS LIMITED ( A Subsidiary of Coal India Limited ) Board of Directors ( During the year 2013-14) Chairman-cum-Managing Director Shri D.C. Garg - From 01.05.2007 Functional Directors Shri Om Prakash - Technical ( w.e.f. 01.06.2008 ) Shri Sushil Behl - Finance (upto 31.08.2013 ) 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 ( upto 02.04.2013) Dr. M.R. Anand - Economic Advisor, Ministry of Coal, New Delhi ( w.e.f. 03.04.2013) 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 - upto 26.04.2013 Ms. Lalitha Kumar - upto 23.02.2014 Shri Vinod Somani - upto 23.02.2014 Shri Arun Balakrishnan - upto 23.02.2014 Dr. D. Chandrashekharam - upto 23.02.2014 Permanent Invitee(s) Shri R.D. Tripathi - Chief Operations Manager, Central Railway, Mumbai ( w.e.f. 07.05.2013) Shri S.S. Kshatriya - Add. Chief Secretary (Revenue), Govt. of Maharashtra, Mumbai ( w.e.f. 06.06.2013) 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 2013-14 WESTERN COALFIELDS LIMITED Ref : WCL/SECY/BD/AGM-39/2014/206 Date : 7th June, 2014 N O T I C E THIRTY NINETH ANNUAL GENERAL MEETING Notice is hereby given that the Thirty Nineth Annual General Meeting of Western Coalfields Limited will be held at 11.00 A.M. on Wednesday, the 11th June, 2014 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, 2014 and Profit & Loss Account for the year ended 31st March, 2014 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) Company Secretary Registered Office : Coal Estate, Civil Lines NAGPUR - 440 001 4 WESTERN COALFIELDS LIMITED 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. 2. Members are also requested to accord their consent for convening the meeting at a shorter Notice under section 101(1) of the Companies Act, 2013. To, 1. Members/Shareholders, Western Coalfields Limited 2. StatutoryAuditors 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 ANNUAL REPORT 2013-14 6 WESTERN COALFIELDS LIMITED 7 ANNUAL REPORT 2013-14 8 ANNUAL REPORT 2013-14 The sales realization during the fiscal was ` 8711.93 crores which is 7% more than the last year's realization of ` 8137.05 crores. Additional revenue of ` 310.01 crores generated through e-auction during 2013-14 was less than the additional revenue of ` 392.11 crores earned dur- ing the last year. Your company produced about 86.67% of Coal through departmental means, whereas capacity utilization in departmental coal production has been 96.96%. The overall departmental system capacity utilization during the year was 96.30%. Your company has achieved overall productivity of 2.96 tonnes per man-shift during the year 2013-14, which is 113.85% of the target of 2.60 tonnes per man shift. Your company continued to maintain high utilization of HEMM, which has been more than CIL's average during the year 2013-14. WCL ranked 1st in utilization of Dozers, 2nd in Draglines, 3rd in Dumpers, and 4th in Shovels, amongst all subsidiaries of CIL. For further strengthening WCL purchased 78 new equipment comprising of 60T Dumpers, Hydraulic Excavators, Dozers, 250mm Drills, against surveyed off during the fiscal. Financial Performance During the year, WCL achieved the turnover of ` 8578.33 crores with a pre-tax profit of ` 325.86 crores, which is less than the last year's pre-tax profit of ` 428.87 crores, despite of increase in store cost by ` 146 crores (mainly on account of Diesel price increase), increase in provisions for mine closure expenses by ` 64 crores, increase in contractual expenses by ` 67 crores, decrease in sales revenue by ` 91 crores and decrease in interest income from deposits by ` 60 crores. Net worth of the company has risen from a level of ` 3410.91 crores last year to ` 3479.48 crores as on 31-03-2014. Your Directors have recommended a dividend payment of ` 134.29 crores @ 45.20% on the Paid up Capital of the company that is ` 297.10 crores, a tangible demonstration of WCL's ability to continue creating value. Creation of Assets Company has invested ` 287.66 crores during FY 2013-14 on development of new mines and infrastructure along with replacement of old assets, entirely from internal resources. HEMM worth ` 140.00 crores were purchased during the year, whereas the equipment for underground mining costing ` 10.08 crores were added in the fleet. Planning Preparedness Your company is operating 32 Ongoing Projects/Schemes with a sanctioned capacity of 32.261 MTY and capital of ` 1639.50 crores. Out of these, 19 projects have contributed 15.27 million tonnes of coal production during the year 2013-14. Coal production of 19.97 Million Tonnes is envisaged during FY 2014-15 from on going projects/schemes. Further, 34 Projects with an estimated capacity of 42.78 MTY and capital expenditure of ` 10000.46 crores have been planned, for the XIIth Plan period for sustaining production levels. Cost Plus Projects In the company, many of the ongoing projects and most of the projects in future category are 10 WESTERN COALFIELDS LIMITED not viable that is to yield requisite 12% IRR at 85% capacity, at notified price due to higher cost of production on account of high stripping ratio, high wage bill, hike in land compensation rate by Govt. of Maharashtra, hike in fuel price, etc. Unviable projects cannot take off as no investment can be made without entering in to cost plus agreement with prospective/willing consumers. Up to 31st March 2014, total 38 unviable projects have been approved by WCL Board, subject to cost plus agreements with prospective consumers, out of which Coal Supply Agreements for 12 projects have been executed. Further, opening of unviable projects has been held up for want of execution of cost plus agreements. Issues related to cost plus agreements have been flagged with CIL/MoC for suitable guidelines for expeditious opening of the unviable on-going/future projects. Exploration and addition in Reserves Exploratory drilling to the tune of 97073.20 meters has been carried out during the fiscal by CMPDIL in WCL command area, which includes 68728.10 meters in CIL Blocks and 28345.10 meters in Captive Blocks.