A PROJECT REPORT ON

A SUMMER TRAINING PROJECT REPORT

AT

CENTRAL COALFIELD LIMITED

BY
MANISH KUMAR SINGH
REG. NO.- 17RCB1720
ROLL NO.- 21MB605975
MBA 3RD SEM
BATCH- 2021-2023

DR. SHYAMA PRASAD MUKHERJEE UNIVERSITY, RANCHI (SCHOOL

OF MANAGEMENT STUDIES)

UNDER THE GUIDANCE OF K.K BISWAS SIR Dy. Manager

(Finance) CCL, Ranchi
CERTIFICATE
This Is To Certify That Project On Risk Management In
CCL,Ranchi Has Been Carried Out By MANISH KUMAR
SINGH From
10.01.2023 To 25.02.2023 Under My Supervision In Partial
Fulfilment Of His MBA(finance) Course At DR. SHYAMA
PRASAD MUKHERJEE UNIVERSITY, RANCHI.

I Am Satisfied With His Sincere Performance And Study

Conducted By His At CCL.

Signature Of Guide
Name: K. K. BISWAS
 ACKNOWLEDGEMENT

The Project Report on various types of case studies and

company’s work, Rules offered a great learning
experience. During the tenure of this project, I was
fortunate to have interacted with people who are their
own capacities have encouraged and have guided me.

It is an exhilarating experience to do my training at Finance

department of Central Coalfields Limited. I express my deep
sense of gratitude to CCL for the same.
On the very outset of this report, I would like to extend my
sincere & heartfelt obligation towards all the personages
who have helped me in this endeavor.

Without their active guidance, help, cooperation &

encouragement, I would not have made headway in the
project. I am ineffably indebted to MR. K. K. BISWAS for
conscientious guidance and encouragement to accomplish
this assignment.

I am extremely thankful and pay my gratitude to my internship

incharge MR. VIKRANT SIR for his valuable guidance and
support on completion of this project. I extend my gratitude to
DR.
SHYAMA PRASAD MUKHERJEE UNIVERSITY, RANCHI
for giving me this opportunity. I also acknowledge with a
deep sense.
 DECLARATION

I, MANISH KUMAR SINGH, student of MBA, declare

that I have done the project on “ A Study of ‘RISK
MANAGEMENT ON CCL” at Finance Department of
Central Coalfields Limited Ranchi” under the guidance of
sr. MANAGER MR K. K BISWAS , CCL RANCHI in fulfilment of
MBA Program- during academic year- 2021-2023. All the
data represented in this project is true & correct to the best
of my knowledge & belief. I also declare that this project
report is my own preparation and not copied from
anywhere else. I take this opportunity to express my deep
sense of gratitude, thanks and regards towards all of those
who have directly or indirectly helped me in the successful
completion of this project.
I present my sincere thanks to General Manager (HRD).
who allowed me to take training at CCL. I would also like to
thank HRD, DEPARTMENT ‘s Staffs for their wonderful
support & inspirable guiding. I also thank K. K BISWAS dy.
Manager (Finance) who has sincerely supported me with
the valuable insights into the completion of this project.

Date:
Place: Signature
 CONTENT
S.NO TOPICS PAGE NO.

1. EXECUTIVE SUMMARY 7

2. OBJECTIVE OF STUDY 8-9

3. RESEARCH METHODOLOGY 10

4. COLLECTION OF DATA 11

5. COMPANY PROFILE 12-18

6. SWOT ANALYSIS 19-23

7. RISK MANAGEMENT ON CCL 24-51

8. RECOMMENDATION 52

9. AREA OF FURTHER STUDIES 53

10. CONCLUSION 54

11. BIBLIOGRAPHY 55

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 EXECUTIVE SUMMARY

Coal India limited is one of the largest coal producing companies in the
world. As of 30th April 2016, it operated 470 mines in 21 major coal fields
across 8 states in India including 164 opencast mines 275 underground
mines and 31 mixed mines.
Coal mining raises serious environmental and social concerns, including
soil erosion, noise and water pollution and impact on local bio-diversity.

The environment and social issue related with coal exploration and
production such as displacement are of specific nature as the coal
reserves are located in the river basins such as Damodar, Mahanadi, and
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Barhani etc. which are rich in forest cover and are a habitat for precious
wildlife and indigenous tribal communities. CIL and its subsidiaries being
profit making companies have sufficient resources to discharge its
responsibilities towards environment management, community and
peripheral development.

❑ Risk management is the process of identifying, assessing and

controlling financial, legal, strategic and security risks to an
organization’s capital and earnings.

❑ The main purpose of risk management?

The purpose of risk management is to identify potential problems before
they occur so that risk-handling activities may be planned and invoked as
needed across the life of the product or project to reduces adverse
impacts on achieving objectives.

THE FIVE ELEMENTS OF RISK

MANAGEMENTS

• Risk Identification. Risk identification is the process of

documenting potential risks and then categorizing the actual
risks the business faces.
• Risk Analysis
• Response Planning

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• Risk Mitigation
• Risk Monitoring

OBJECTIVE OF STUDY

Risk management is an important process that

managers should maintain in an organization. It is
inevitable to have risks and managers should have better
strategies to deal with risks. The long-term survival of an
organization depends on the ability to manage risks.
• Risk management is an important process that managers
should maintain in an organization.
• It is inevitable to have risks and managers should have
better strategies to deal with risks.
• To understand the general performance of the company.
• To analyses the performance effectiveness of the company.

• CCL has been managing the various aspect of risk

management through continuous of a long period of time.
• the present study is trying to investigate the different
aspect of risk management on central coalfield limited .

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 RESEARCH METHODOLOGY

• During the project, the risk management will be treated

as an iterative process based on the continuous
improvement principle being permanent monitored.

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 COLLECTION OF DATA
The data has been collected from the primary and secondary
sources:

❑ PRIMARY DATA
A. Department visit- discussion with the
concerned person and interviewing officers
in account and finance sector . B.
Observation method.

❑ SECONDARY DATA
A. Annual report of CCL
B. Journals and magazines
C. Study of files and office documents
D. Website of CCL

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 COMPANY PROFILE

TYPE - COAL SERVICE PROVIDER

AVAILABILITY - COUNTRYWIDE
OWNER -GOVERNMENT OF INDIA
KEY PEOPLE - CHAIRMAN & CHIEF MANAGING
DIRECTOR (SRI P.M PRASAD)
FOUNDED - 1ST NOVEMBER 1975
WEBSITE - WWW.CENTRALCOALFIELDS.IN

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Formed on 1st November 1975, CCL (formerly National Coal
Development Corporation Ltd) was one of the five subsidiaries of
Coal India Ltd. which was the first holding company for coal
in .the country (CIL now has 8 subsidiaries).

Central Coalfields Limited (CCL) is a subsidiary of Coal India Limited

(CIL), an undertaking of the Government of India. CCL manages the
nationalization of the Coal Mines Authority, Central division. The
registered and corporate office is at Darbhanga House, Ranchi,
Jharkhand.

Central Coalfields Limited is a category-I Mini-RatnaCompany since

October 2007. Formed on 1st November 1975, CCL(formerly
National Coal Development Corporation Ltd) was one of the five
subsidiaries of Coal India Ltd. which was the first holding company
for coal in the country.

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 • VISION OF CCL:

“Committed to create eco-friendly mining”

The Mission of CCL is to produce and market the planned quantity of coal and coal
products efficiently and economically with due regards to safety, conservation and quality.
• The main thrust of CCL in the present context is to orient its operation toward
market requirements maintaining at the same time financial viability to meet the
resource needs.

• MISSION OF CCL:

“To become a world class, innovative, competitive & profitable coal mining
operation to achieve customer satisfaction as top priority”

• OBJECTIVE OF CCL

The major objectives of Central Coalfields Limited (CCL) are –

• To optimize generation of internal resources by improving productivity of

resources, prevent wastage and to mobilize adequate external resources
to meet investment need.
• To maintain high standards of Safety and strive for an accident-free
mining of Coal.
• To improve the quality of life of employees and to discharge the
corporate obligations to Society at large and the community around the
Coalfields in particular.
• To provide adequate number of skilled manpower to run the operations
and impart technical and managerial training for up gradation of skill.
• To improve consumer satisfaction.

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• To enhance the CSR activities specifically in the field of Health, Sanitation
and Drinking Water in the Surrounding villages.
• To modernize existing Mines.

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CORPORATE STRUCTURE OF CCL

15
 SHRI P.M. PRASAD - CHAIRMAN CUM
MANAGING DIRECTOR

Shri PM Prasad, took charge as

Chairman - cum - Managing Director
( CMD) of Central Coalfields Limited
( CCL) on 01/09/2020.

Shri Prasad has 38 years of experience in varied facets of operations

and management. A mining engineer from Osmania University, he
has earned an M.Tech in ‘Open-Cast Mining’ from the Indian School
of Mines (IIT- ISM), Dhanbad. He acquired a firstclass mines
manager certificate from DGMS in 1988 and obtained a degree in
law from Nagpur university in 1997. Shri Prasad began his career in
1984, as an executive trainee with
Western Coalfields Limited (WCL), a subsidiary of Coal India Limited
(CIL). He exhibited dedication, hard work, sincerity and dynamic
leadership as he progressed through different roles in the company
and became the General Manager of Lingaraj area in Mahanadi
Coalfields Limited (MCL).

SHRI K.R. VASUDEVAN DIRECTOR

(FINANCE )

Shri Kadattur Ranganathan Vasudevan,

took over charge of Director (Finance),

Central Coalfields Limited on 01st July,

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 2021 in addition to his assignment at
Mahanadi Coalfields Limited (MCL).
He has rendered around 35 years of service in coal industries in the field of
finance in various capacities in BCCL & CCL. He was born in Chennai on
17th July, 1962. He passed his Bachelor in Commerce (Hons) from
Ravenshaw College, Cuttack with first class. He obtained his professional
degree from the Institute of Cost Accountants of India in the year 1989 and
also passed L.LB from Utkal University. He comes with a rich work
experience spanning more than three decades in various fields of Finance in
different sectors.

CORPORATE STRUCTURE AND SUBSIDIARY COMPANIES:

Coal India is a holding company with seven wholly owned coal

producing subsidiaries companies and one mine Planning and
Consultancy Company.
It encompasses the whole gamut of identification of coal reserve,
detailed exploration followed by design and implementation and
optimization operations for coal extraction in its mines. The
producing companies are:
1. Eastern Coalfields Limited (ECL), Sanctoria, West Bengal
2. Bharat Coking Coal Limited (BCCL), Dhanbad, Jharkhand
3. Central Coalfield Limited (CCL), Ranchi, Jharkhand
4. South Eastern Coalfields Limited(SECL), Bilaspur, Chattisgarh
5. Western Coalfields Limited (WCL), Nagpur, Maharashtra
6. Northern Coalfields Limited (NCL), Singrauli, Madhya Pradesh
7. Mahanadi Coalfields Limited (MCL), Sambalpur, Orissa
8. Coal India Limited Africana Limited, Mozambique

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9. The consultancy company is Central Mine Planning and Design
Institute Limited(CMPDI), Ranchi, Jharkhand
North Eastern Coalfield (NEC) a small coal producing unit
operating in Margherita, Assam is under direct operational control
of CIL.

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 SWOT ANALYSIS
• STRENGTH
▪ High reserves with huge production potential: -

CCL produced 68.846 MT of coal in 2021-22, which is about

11.06% of Coal India’s total production (622.62 MT). The
coal reserves in CCL command area is of 45 Billion tonnes
(as on 01.04.2021) which is about 13% of the total projected
coal reserves of India.

▪ Infrastructure available in almost all Coal Blocks:-

For development and operation of coal mines, we need a good

rail and road network. All coalfields of CCL have a reasonably
good rail & road network and thus planning & implementation of
projects become easier with smooth transportation of man and
machineries as well. This rail & road network further enables
swift movement of Coal to the consumers. CCL is also
augmenting the rail network for coal evacuation through
construction of various sidings and laying of new rail lines like
Tori Shivpur 3rd rail line etc.

• Skilled Manpower available in sufficient numbers:-

CCL has been in the business of coal mining for over 45 years. Its
manpower strength as on 31.03.2022 is 35,861, which comprises

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of skilled HEMM operators and manpower in different discipline
and trades, who are well conversant with their jobs.

• WEAKNESS
▪ UG mines with low productivity:-

UG mines in CCL have got their properties exhausted and as such the rate
of production cannot be enhanced much. However, efforts of
modernization in the form of Churi CM has improved the things, and
Continuous Miner (CM) technology has been planned in PPR U/G and
Parej U/G also, which will add on UG production in coming years.

▪ Delay in obtaining FC and EC:-

The process of obtaining EC and FC is time consuming and at times

production potential of some of the mines does not match with the
available EC and FC. Further extension/enhancement renewal of FC
and EC consumes substantial time resulting in loss of production

▪ Land Possession:-

Land owners/villagers/Residents, inspite of the best compensation

package, show reluctance in handing over land and create undue delay in
vacation of land which slows the pace and progress of the mine. Their
demands are often beyond the R&R policy.

▪ Rehabilitation of Project affected Persons:-

25
The rehabilitation of project affected persons(PAPs) at times creates bottle
neck in the development of new projects, as the demand of PAFs are often,
beyond the norms of R&R policy of CIL and other approved guidelines of the
company.

• opportunity

▪ The demand for coal is rising :-

Its demand rising day by day and its expected that the demand
supply gap of coal is likely to increase in future and thus the
market opportunities are going to increase and expand day by day.

▪ Outsourcing of production processes:-

CCL can also resort to outsourcing of OBR removal and coal

production, wherein the departmental capacity is already utilized
or deployment of departmental equipment is not economical.
Even marginal deposits and thin seam operations can be done
through outsourcing, at much cheaper cost than that by
departmental resources.

▪ Opportunities for value addition of its products through sizing,

washing or conversion to Liquid and Gas:-

The price of washed coking coal is double the price of mined

Coking Coal. Different washeries of the company operate upon this

26
 to take advantage of the price differential beyond the available
capacity of the projects.

• THREATS

▪ Captive mining in coal is now permitted in India, also coal blocks are
allotted to many private players which may result in lowering of
demand in the coming times.
▪ Upcoming private players may tend to hire the highly skilled
employees of the company through better Pay, Perks and other
facilities.
▪ Increase in import may also result in a downward consumption of
domestic Coking coal and coal products.

▪ Constantly increasing demand for salary hike by employees will

further overload the cost components, structure and profitability
may get minimized.
▪ Renewable Energy: The fast expansion of renewable energy
resources (Solar, Hydel Wind etc) is a threat to the mining industry.

STATEMENT OF ASSETS AND LIABILITIES

AS AT 31.03.2022

A AND LIABILITIES
1. Shareholders’ funds
(a) Equity Share Capital 940.00 940.00 (b) Other Equity 7,471.98 6,608.53
(c) Money Received against Share Warrants - -
Sub - total - Shareholder’s funds 8,411.98 7,548.53

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 2 Share Application Money pending allotment - -

3 Non-Controlling Interest - -4 Non-Current Liabilities

(a) Financial Liabilities 146.25 84.40

(b) Deferred Tax Liabilities (Net) - -

(c) Other Non-current Liabilities 496.58 537.33

(d) Provisions 5,118.65 4,876.36

Sub - total - Non-current Liabilities 5,761.48 5,498.09 4 Current Liabilities

(a) Financial Liabilities 2,678.53 2,628.90

(b) Current Tax Liabilities (net) - -

(c) Other Current Liabilities 3,037.75 2,889.75

(d) Provisions 821.61 834.70

Sub - total - Current Liabilities 6,537.89 6,353.35
TOTAL - EQUITY AND LIABILITIES 20,711.35 19,399.97
B ASSETS
1 Non- current Assets

(a) Fixed Assets 7,232.06 6,949.98

(b) Goodwill on consolidation - -

(c) Deferred Tax Assets (Net) 679.47 674.14 (d) Financial Assets 1,712.59 1,315.65
(e) Other Non-current Assets 2,293.68 1,436.20
Sub-total - Non-current Assets 11,917.80 10,375.97 2 Current assets

(a) Financial Assets 4,390.16 4,872.61

(b) Inventories 1,031.34 1,288.67

(c) Other Current Assets 3,217.82 2,711.04

(d) Current Tax Assets (net) 154.23 151.68

Sub - total - Current Assets 8,793.55 9,024.00 TOTAL - ASSETS

20,711.35 19,399.97

WHAT IS RISK?

Risk is the possibility of something bad happening. Risk

involves uncertainty about the effects/implications of an activity
with respect to something that humans value such as health,

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 well-being, wealth, property or the environment often focusing
on negative, undesirable consequences.

Risk imposed by /on account of

a) Government regulation - Mining companies have been

subjected to many new regulations and legislation over
the decades. Since the late 19th century, a range of new laws
to regulate mining have been passed at state and federal
levels. While some were essential, others placed a huge
burden on mining operations.
Ex. Government levies

RISK MANAGEMENT
• Risk management is the process of identifying, assessing and
controlling financial, legal, strategic and security risks to an
organization’s capital and earnings. These threats, or risks,
could stem from a wide variety of sources, including financial
uncertainty, legal liabilities, strategic management errors,
accidents and natural disasters.

• If an unforeseen event catches your organization unaware,

the impact could be minor, such as a small impact on your
overhead costs. In a worst-case scenario, though, it could be
catastrophic and have serious ramifications, such as a

29
 significant financial burden or even the closure of your
business.

• To reduce risk, an organization needs to apply resources to

minimize, monitor and control the impact of negative events
while maximizing positive events. A consistent, systemic and
integrated approach to risk management can help determine
how best to identify, manage and mitigate significant risks.

IMPORTANCE OF RISK MANAGEMENT

Risk management is an important process because it empowers a

business with the necessary tools so that it can adequately
identify and deal with potential risks. Once a risk has been
identified, it is then easy to mitigate it. In addition, risk
management provides a business with a basis upon which it can
undertake sound decision-making.

For a business, assessment and management of risks is the best

way to prepare for eventualities that may come in the way of
progress and growth. When a business evaluates its plan for
handling potential threats and then develops structures to
address them, it improves its odds of becoming a successful
entity.

IDENTIFYING RISKS

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Risk identification is the process of identifying and assessing
threats to an organization, its operations and its workforce. For
example, risk identification may include assessing IT security
threats such as malware and ransomware, accidents, natural
disasters and other potentially harmful events that could disrupt
business operations.

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THE RISK MANAGEMENT PROCESS
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 At the broadest level, risk management is a system of people,
processes and technology that enables an organization to
establish objectives in line with values and risks.

A successful risk assessment program must meet legal,

contractual, internal, social and ethical goals, as well as monitor
new technology-related regulations. By focusing attention on risk
and committing the necessary resources to control and mitigate
risk, a business will protect itself from uncertainty, reduce costs
and increase the likelihood of business continuity and success.

RISK ANALYSIS PROCESS

Risk analysis is a qualitative problem-solving approach that uses

various tools of assessment to work out and rank risks for the
purpose of assessing and resolving them. Here is the risk analysis
process:

1. Identify existing risks

Risk identification mainly involves brainstorming. A business
gathers its employees together so that they can review all the
various sources of risk. The next step is to arrange all the
identified risks in order of priority. Because it is not possible to
mitigate all existing risks, prioritization ensures that those risks
that can affect a business significantly are dealt with more
urgently.

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2. Assess the risks

In many cases, problem resolution involves identifying the problem

and then finding an appropriate solution. However, prior to
figuring out how best to handle risks, a business should locate the
cause of the risks by asking the question, “What caused such a risk
and how could it influence the business?”

3. Develop an appropriate response

Once a business entity is set on assessing likely remedies to

mitigate identified risks and prevent their recurrence, it needs to
ask the following questions: What measures can be taken to
prevent the identified risk from recurring? In addition, what is the
best thing to do if it does recur?

4. Develop preventive mechanisms for identified risks

Here, the ideas that were found to be useful in mitigating risks are
developed into a number of tasks and then into contingency plans
that can be deployed in the future. If risks occur, the plans can be
put to action.

TYPES OF RISK
A. External risk

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 I. Market policy
II. Seasonal impact
III. HR related issue
IV. Technical upgradation

A. Internal risk

I. Credit risk
II. Liquidity risk
III. Foreign exposure risk
IV. Interest rate risk

Risk Management Committee of CCL

The present constitution of the Risk Management Committee as on

31.03.2022 is as follows:
Shri Ramesh Kr. Soni, Non-Official Part-time Director
Shri Bhola Singh, Director (Tech./Opn), CCL
Shri S.K. Gomasta, Director (Tech/P&P), CCL
Shri S.K. Pandey, GM(Oprn)Chief Risk

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 ➢ EXTERNAL RISKS

▪ MARKET POLICY
- It is a market created to directly inform policy decisions with
its price. That is, while the market may also serve other functions,
such as hedging or entertainment, its primary function is to create
prices which embodies information which is directly relevant to
people considering some choice between policy alternatives. The
perceived function of most financial markets, in contrast, is to allow
people to hedge and rebalance their portfolios.

▪ SEASONAL IMPACT
- There Is No Seasonal Impact in coalfield company.

▪ TECHNICAL ISSUE
- The most important reason is the unavailability of the latest
technological equipment for deep depths coal mining. The
machinery available with Coal India Ltd. called open-cast mining
allows drilling mostly up to 300 meters below earth’s surface, but
about 40% of total coal reserves are located at a deeper depth
which cannot be extracted using opencast mining. The company
does not possess an accurate assessment and evaluation system
of coal reserves distribution in the country. Technology and
systems available with Coal India Ltd. do not show a precise
account of coal reserves, due to which they mine imperfectly.

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➢ INTERNAL RISKS
• CREDIT RISK
- It is the possibility of a loss resulting from a borrower's failure
to repay a loan or meet contractual obligations. Traditionally, it
refers to the risk that a lender may not receive the owed principal
and interest, which results in an interruption of cash flows and
increased costs for collection. Excess cash flows may be written to
provide additional cover for credit risk. When a lender faces
heightened credit risk, it can be mitigated via a higher coupon rate,
which provides for greater cash flows.

Fuel Supply Agreements (FSAs)

-As contemplated in and in accordance with the terms of
the New Coal Distribution Policy (NCDP), the company enters into
legally enforceable FSAs with customers or with State Nominated
Agencies that in turn enters into :

• appropriate distribution arrangements with end customers.

Our FSAs can be broadly categorized into FSAs with customers
in the power utilities sector, including State power utilities,
private power utilities
(“PPUs”) and independent power producers (“IPPs”);

• FSAs with customers in non-power industries (including

captive power plants (“CPPs”)); and

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• FSAs with State Nominated Agencies. Liquidity Risk:-

• Prudent liquidity risk management implies maintaining

sufficient cash and marketable securities .
• availability of funding through an adequate amount of
committed credit facilities to meet obligations when due.
• Due to the dynamic nature of the underlying businesses,
Company treasury maintains flexibility in funding by
maintaining availability under committed credit lines.
• Management monitors forecasts of the Company’s liquidity
position (comprising the undrawn borrowing
facilities) and cash and cash equivalents on the basis of
expected cash flows. This is generally carried out at local
level in accordance with practice and limits set by the
Company. The Company is having Cash Credit facility of Rs
55Cr. from Consortium of bankers (having State Bank of India
as the lead Bank) through its holding Company CIL. The said
facilities is collaterally secured by creating hypothecation
charge over the current assets comprising of Book Debts and
Stock of Raw materials, Semifinished and finished goods,
Stores and Spares not relating to Plant & Equipment
(Consumable Stores & Spares) to the extent of Rs 83.00
• Cr. Further, RS 2000.00 crore was set up as non-fund-based
limit outside consortium in order to facilitate.
FOREIGN EXPOSURE RISK:

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 Foreign exchange exposure is the risk related with activities that
involve an international firm in currencies other than its home
currency. Fundamentally, it is the risk that a foreign currency may
move in a direction which is financially disadvantageous to the
international firm.
• INTEREST RISK - “The interest rate risk refers to the chance
that investments in bonds will suffer as the result of
unexpected interest rate changes” Finally, company look at
some financial risks and see that Mowi's financing is always at
variable interest rates and shall be executed through the
parent company. The debts are hedged by currencies or fixed-
interest and interest-rate derivatives. Their goal in the first 5
years is to hedge 0% - 35% of their long-term interestbearing
liabilities with currency-related interest rate derivatives or
fixed interest rates.

Why INTEREST RISK should not be ignored ?

As with any risk management assessment, there is always the

option to do nothing, and that is what many people do.
However, in circumstances of unpredictability, sometimes not
hedging is disastrous. Yes, there is a cost to hedging, but what is
the cost of a major move in the wrong direction? One need only
look to Orange County, California, in 1994 to see evidence of
the pitfalls of ignoring the daunting threat of interest rate risk.
In a nutshell, County Treasurer Robert Citron borrowed money
at lower short-term rates and lent money at higher long-term
rates. The strategy was great short-term rates fell and the
normal yield curve was maintained - but, when the curve began
39
 to turn and approach inverted yield curve status, things got
ugly. Losses to Orange County and the almost 200 public
entities for which Citron managed money were estimated at
$1.6 billion and resulted in the bankruptcy of the municipality -
a hefty price to pay for ignoring interest rate risk.

Risk imposed by / on account of :-

A. Government Regulation –

I. LEVY TAX- Levies are the legal means by which a taxing

authority or a bank can seize property for the payment of a debt.
Properties that can be seized in a levy are both real such as cash,
cars, and houses as well as intangible and held by someone else,
like future wages.
How a Levy Works?
Levies can be exercised by either a tax authority–such as a state
treasury or the Internal Revenue Service (IRS)–or a bank.
A levy is different from a lien because a levy takes the property to
satisfy the tax debt, whereas a lien is a claim used as security for
the tax debt. In other words, while a lien secures the government’s
interest or claim to an individual’s or business’s property when the
tax debt remains unpaid, a levy actually permits the government
to seize and sell the property to pay the tax debt.

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II. Impact of GST Rate on Coal- Coal is required in mass
numbers by numerous industries all over India. Coal is
primarily transported through trains as India has one of the
best railway networks. Transportation of coal from the coal
mines to the factory or construction sites is an expensive
affair due to the service tax charged at the rate of 15% on the
transportation services.

Under GST, the tax rate on transportation services through rail has
been charged at the rate of 5%. Clean environment would not be
subsumed under GST. The coal industry would have fewer logistics
cost due to the reduction in the tax rate on both goods and service
and a better-regulated tax system.
so that , The reduction in the tax rate of coal is likely to be
beneficial to the Indian economy. Coal is an important input in
many different types of industries. Thus, it will beneficial to the
construction, iron, and power generating industries.

IT – CORPORATE TAX-

The reduction in corporation tax rates provides a big respite to

Coal India (CIL), the stock is yet to see a surge. The coal producer
may see a 7 per cent rise in earnings following the reduced tax
rates. However, its share price —trading at around Rs 193 prior to
the tax cut announcement — now stands at Rs 199-levels. After
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the tax cuts, analysts at Kotak Institutional Equities reduced their
effective tax rate for CIL to 30 per cent from 35 per cent.
This led to a 7 per cent upward revision in earnings forecast.
However, soft coal volumes, declining e-auction premiums, and
the overhang of a stake sale by the government could keep the
stock under check, despite attractive valuations.
B. Geographical constraints-
• under section 13 of the SPT Act would be written as "for
nonagriculture purposes of agriculture land, the ownership and
title of the riyat (owner) will remain intact as it was before
enactment of the present amendment as it was originally in
the SPT act 1949.“
• A similar clarification has been made under the CNT Act's
section 21, the officials said. They said after these
amendments, the ownership and title of the original tribal land
would not change even if it was used for developmental work.

• The Jharkhand government hinted at amending rules so that if

land acquired by any company is not used for five years it will
be returned to the original land owner on par with a Central
legislation. A provision of the Jharkhand Right to Fair
Compensation and Transparency in land Acquisition,
Rehabilitation and Resettlement Rules -2015 stating that if
any land acquired by a company was not utilised for five
years will be returned to original land owner, has been
removed by the previous government, Congress leaders
alleged in the state Assembly.

42
 • The Jharkhand government today decided that even after land
acquired under the Chhotanagpur Tenancy Act (CNT) and the
Santhal Pargana Tenancy Act (SPT) for development projects,
the ownership will remain with the land owner.
In India under the Schedule VII, land is a state subject while land
acquisition is a concurrent subject. This creates friction in federal
nature of our polity as the state sensitivities are sometimes not
realized by Union’s acquisitions. Land Acquisition Laws by State.

The controversies regarding the Land Acquisition Bill have brought

the rural development to a standstill which led the states to
appeal to the center to frame their own laws rather than waiting
for the consensus endlessly. There is a considerable merit in the
argument.

EXPERIENCE: Prior to the enactment of 2013 law, the land

acquisition was done by the states according to their own laws
rather than the 1894 colonial law. Thus, states are more
experienced to handle these land acquisition issues.

POPULAR NATURE OF LAW: According to the 2013 law which is

applicable to entire India , SIA’s done could be rejected by the
expert group just by providing a reason in writing. Some states
had even more stringent laws than this ‘2013 law’ and offered
even more compensation to the farmers, thus being more farmer
friendly.
ENVIRONMENT CLEARENCE ISSUE
43
 - There are significant environmental impacts associated
with coal mining and use. It could require the removal of massive
amounts of top soil, leading to erosion, loss of habitat and
pollution. Coal mining causes acid mine drainage, which causes
heavy metals to dissolve and seep into ground and surface water.
Environmental impacts associated with using coal as an energy
source are particulate emission, ground level ozone, smog and acid
rain. Coal and fuel oil combustion emit fly ash particles into the
atmosphere, which contribute to air pollution problems.

44
 ❑ What are the risk company currently in and How
STATUT

ORY these risk can be mitigated?

REPOR
TS
are currently in the followings risks and there

measures :

-
Financial Risk Management Objectives and Policies

The Company’s principal financial liabilities comprise trade and

other payables. The main purpose of these financial liabilities is
to finance the Company’s operations and to provide guarantees
to support its operations.
The Company’s principal financial assets include loans, trade and
other receivables, and cash and cash equivalents that is
derived directly from its operations. The Company is exposed to
market risk, credit risk and liquidity risk. The Company’s senior
management oversees the management of these risks.

The Company’s senior management is supported by a risk

committee that advises, inter on financial risks and the
appropriate financial risk governance framework for the
Company. The risk committee provides assurance to the Board
of Directors that the Company’s financial risk activities are
governed by appropriate policies and procedures and that
financial risks are identified, measured and managed in
accordance with the Company’s policies and risk objectives. The
45
Board of Directors reviews and agrees to policies for managing each
of these risks, which are summarized below.

Ri Exposure arising Mesurement Management

sk from
Credit Risk Cash and Cash Ageing Department of
equivalents, trade analysis/ Public enterprises
receivables Credit rating (DPE) guidelines,
financial asset diversification of
measured at bank deposits
amortised cost credit limits and
other securities
Liquidity Risk Borrowings and Periodic cash Availability of
other liabilities flows committed credit
lines and borrowing
facilities

M ark et Risk Future commercial Regular watch

foreign transactions, and review by
Cash flow
recognised
exchange forecast senior
financial assets
and sensitivity management and
liabilities not analysis audit committee.
denominated in
INR
Department of
Cash and Cash Cash flow public enterprises
Market equivalents, Bank forecast (DPE) guide- lines,
Riskinterest deposits and sensitivity Regular watch and

46
 rate mutual funds analysis review by senior
management and
audit committee.
To Mitigate The Risk Of Terminal Benefit Expenses Of Employee
The Company Adopted The Followings:

1. EMPLOYEES BENEFIT SCHEME

GRATUITY

The Company provides for gratuity, a post-employment defined benefit plan

(“the Gratuity Scheme”) covering the eligible employees. The Gratuity
Scheme is fully funded through trust maintained with Life Insurance
Corporation of India, wherein employer contribution is 2.01% of basic salary
and Dearness allowances.

PROVIDENT FUND AND PENSION

Company pays fixed contribution towards Provident Fund and Pension

Fund at pre-determined rates based on a fixed percentage of the eligible
employee’s salary i.e. 12% and 7% of Basic salary and Dearness Allowance
towards Provident Fund and Pension Fund respectively to a separate trust
named Coal Mines Provident Fund (CMPF). The contribution towards the
fund during the period ended 31.03.2022 is Rs. 622.98 Crore (Rs. 598.39
Crore) has been recognized in the Statement of Profit & Loss.

OTHER LONG TERM EMPLOYEE BENEFITS

•Leave encashment

47
The company provides benefit of total Earned Leave (EL) of 30 days and
Half Paid Leave (HPL) of 20 days to the employees of the company,
accrued and credited proportionately on half yearly basis on the first

Life Cover Scheme (LCS)

As a part of social security scheme under wage agreement, the
Company has Life Cover Scheme under Deposit Linked Insurance
Scheme, 1976 notified by the Ministry of Labor, Government of
India, known as “Life Cover Scheme of Coal India Limited” (LCS).
An amount of Rs. 1,25,000 is paid under the scheme w.e.f
01.10.2017. The liability under the scheme is borne by the
Company as per actuarial valuation at each Balance Sheet date.

LEAVE TRAVEL CONCESSION(LTC)

As a part of wage agreement, Non-executive employees are

entitled to travel assistance for visiting their home town and for
“Bharat Bhraman” once in a block of 4 years. A lump sum amount
of Rs. 8000/- and Rs. 12000/- is paid for visiting Home town and
“Bharat Bhraman”, respectively. The liability for the scheme is
recognised basedon actuarial valuation at each Balance Sheet
date.

COMPENSATION TO DEPENDENT ON MINE ACCIDENT BENEFITS

48
 As a part of social security scheme under wage agreement, the
company provides the benefits admissible under The Employee’s
Compensation Act, 1923. An amount of Rs. 15 lakhs is paid to the
next of kin of an employee in case of a fatal mine accident w.e.f
07.11.2019. The expected cost of benefits is recognized when an
event occurs that causes the benefit payable under the scheme.
Funding status of defined benefit plans, defined contribution plans
and other long term employee benefits plans, which are valued on
actuarial basis, are as under:

I. Funded
▪ Gratuity
▪ Leave Encashment
▪ Medical Benefits
▪ Pension scheme
▪ Provident Fund

II. Unfunded
▪ Life Cover Scheme
▪ Settlement Allowance
▪ Group Personal Accident Insurance
▪ Leave Travel Concession
▪ Compensation to dependent on Mine
Accident Benefits

49
Total liability as on 31.03.2022 based on valuation made by the
Actuary is Rs. 3980.61 Crore, details of which are mentioned
below:

All The Employees Benefit Scheme Are Funded By

LIC TRUST .

2. DEBTS:- since the company does not have any debts as such
interest rate risk is not applicable to it but IRR shows that it
can cover the same if arises.

50
 Opening Incremental Closing
Particul Actuarial Liability / Actuarial
Liability as Adjustment Liability as
ars
on during the Year on
01.04.2021 31.03.2022

Gratuity 2,757.22 39.51 2,796.73

Leave 586.71 -58.88 527.83
Life Cover Scheme 10.46 -10.46 0
Settlement Allowance 7.83 4.01 11.84
Executives
Settlement Allowance- 16.53 -4.31 12.22
Nonexe.

Group Personal Accident 0.14 -0.14 0

Insurance Scheme
Leave Travel Concession 44.16 -9.74 34.42
Medical Benefits Executives 285.05 -59.11 225.94
Medical Benefits 13.6 358.03 371.63
NonExecutives
Compensation to 32.82 -32.82 0
dependents in case of mine
accidental death

Tot al 3,754.52 226.09 3,980.61

51
 RECOMMENDATION

o Use new technology for mining.

o Company should take more safety measures for
mining. o Increase the numbers of rakes and wagons.

ISSUE AND CHALLENGES FACED BY CCL

o Coal supply to power sector is to be improved further. o

Rules and regulation of the government. o Delay in
supply of equipment.
o Safety
o Ageing of equipment deployed in mines
o Poor performance by one party to whom the outsourcing
contract was awarded and non-commencement of work
by another party who was awarded outsourcing job for
removal of OB.
o Coal India will address the problem of shortage of man
power particularly the statutory category .

AREA FOR FURTHER STUDIES

52
➢ There is much to be done about risk management in
companies sector in future.

➢ The suggest that further research be conducted on the

same topic with different companies and extending the
years of the sample .

➢ The scope of further research may be extended the risk

management components management including cash ,
marketable securities and receivable management.
CONCLUSION

CCL has been analyzed in terms of financial aspects

especially in risk management . In conclusion, investing in
CCL carries certain risks that should be carefully
considered by investors.

These risks include market risk, operational risk,

regulatory risk, and financial risk. To manage these risks,
investors may consider diversifying their portfolio,
staying informed about the company's operations and
the broader market conditions, and taking a long-term
perspective on their investment. By being aware of these

53
 risks and taking appropriate measures to manage them,
investors can potentially minimize the impact of any adverse
events and improve their chances of achieving their
investment objectives. As always, it's important for investors
to consult with a financial advisor before making any
investment decisions.

BIBLIOGRAPHY

Books And Authors

▪ Annual report of ccl

▪ M.Y khan , P.K Jain (1981), financial
management and cost accounting ( third
edition)
▪ Research methodology
▪ Financial management by Prasanna Chandra
Website

▪ www.ccl.in
▪ Academia.edu.com
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