Coal Industry

-The Source of Energy-

G Bikash Kumar- 21PGDM115
Surabhi Sushree Nayak- 21PGDM142
Jitesh Srivastava- 21PGDM120
Arnab Dash- 21PGDM108
Vinaya S V- 21PGDM146
Srimoyee Bardhan- 21PGDM156
About The Industry
• Why This Industry: - As the industry has great impact on the
economic activities of the country as well as of the global
economy.
• Background: - Coal in India was first mined in 1774 when
John Sumner and S. G. Heatly of the East India Company
commenced commercial exploitation in the Raniganj
Coalfield along the Western bank of Damodar River.
• Importance: - Used for electricity generation, used in
various industries for smelting purpose.

Methodology Used
• Market Share analysis
• HHI Index
• Roy’s Model
• Regression Analysis
• BCG Matrix
• MPC-(Marginal Propensity of Consumption)
• Forecasting
1 Part Analysis
st

• Global Production
• Market Share analysis
• HHI Index
• Roy’s Model
 Global Coal Production(in million tonnes)
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

From the table, we can see that total world’s coal production has gone up, especially for developing countries
like China, India, and Indonesia the production of coal has gone up, this is because of their domestic
consumption as these are the fastest-growing economies. For developing countries coal is believed to be one
of the cheapest and readily available sources of energy.
 Market Share
0.6

0.5

0.4

0.3

0.2

0.1

0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

China India Indonesia US Australia Russia

South Africa Germany Kazakhstan Poland Others

• From the above graph we can see that China is the biggest gainer in terms of coal production whereas the
USA is the biggest loser in coal production.
• Despite global warming and increasing CO2 output China never decreased its coal output to meet its
requirements. Whereas rich western countries shifted their energy dependency on coal to nuclear power and
gas energy. Coming to India, which has been the second-largest coal producer and the consumer has also the
same story to go on.
 HHI
Roy's Model 0.3
0.7
0.25
0.6

0.5 0.2

0.4 0.15

0.3
0.1

0.2
0.05
0.1
0
0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
2000 2005 2010 2015 2020 2025 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

• From the above graphs, we can see that over the year market concentration has been increased, with China having the
highest market share and India in rank two. Almost at present China has half of the market share in Coal production.
• The reason behind competition going down is because of negative growth of previous largest producers like USA,
Germany and other producers. Whereas emerged major producer like China and India are continuously growing their
production, and the competition getting more concentrated on these two players.
 Recent Initiatives
• National miner, Coal India Limited (CIL), said it has approved 32 new coal mining projects in the ongoing financial
year with an estimated cost of Rs 47,000 crore. Of the 32, twenty-four are the expansion of existing projects and
the remaining eight are greenfield.
• First Mile Connectivity aims to ease the life of people residing in coal mine areas by reducing traffic congestion,
road accidents, adverse effects on environment and health around coal mines and by enhancing coal handling
efficiency through employing alternate transport methods like mechanized conveyor system and computerized
loading into railway rakes.
• For promoting import substitution, thrust is being made to offer large quantities of domestic coal through
various format of e-auctions so that the consumers are not inclined towards import of coal. Besides the above,
CIL is also giving discounts through waiver of Performance Incentive, coastal TPPs included, to encourage import
substitution.
2nd Part Analysis
• Regression Analysis
• BCG Matrix
Year Range Significance F There is no increase or decrease of
Null Hypothesis: global competition
2006-2020 0.001597713
2007-2020 0.009184683 Alternate Hypothesis: There is change in global competition

2008-2020 0.043803532

• Regression Analysis: - In statistical modeling, regression analysis is a set of statistical processes for estimating the
relationships between a dependent variable and one or more independent variables. Here the dependent variable is
market competitiveness and concentration of the market.
• From the table we can see that the significance F is less than 0.05(our significance level), so we fail to prove the null
hypothesis hence alternative hypothesis need to be accepted. It indicates that over the years global competition is
getting more concentrated.
• The Boston Consulting Group (BCG) growth-share matrix is a planning tool that uses graphical representations of a
company’s products and services in an effort to help the company decide what it should keep, sell, or invest more in.
• From the graph we can say that only China is in Star quadrant and all developing countries are in question mark stage
and all developed economies were in dog quadrant.
3 Part Analysis
rd

• MPC-(Marginal Propensity of
Consumption)
• Forecasting
 Coal Consumpti on & GDP
8000

7000

6000

5000

4000

3000

2000

1000

0
5 07 09 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
2 00 2 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 2 0 20

GDP of India Coal Consumption of India

• The above graph shows the forecasting figures of GDP and Coal consumption of India till 2050. From the above graph and
the trend, we can see that there is positive correlation exists between GDP and consumption of Coal. This relation can be
understood from the given equation which is derived after regression analysis keeping GDP as independent variable with
Coal consumption is dependent variable. The equation we got is as follows(C=a + bY) C = 264.2052 + 0.265359Y. And
the multiplier we got is 1.36120908 which shows that there is a positive relation between growth in GDP and consumption
of Coal.
Overall Conclusion
• The overall analysis showed us that there is a positive relation exists between coal consumption and economic
growth.
• As this sector depends on the availability of the resources to achieve the new heights so we have seen that how this
factor affects India to top in this sector as well as it’s economy.
• China having largest mines and deposits able to do very good in this sector and no one is near to it in competition.
Also, we understood that how changing time countries dependence on alternate source of energy effects coal
industry production as well as consumption.

Recommendation
• Despite China and India being top 3rd and 4th in coal reserves they come in top 1st and 2nd in production, and looking
into present trend by 2050 China will exhaust its all reserves and it will open doors for India to be top producer
keeping political issues in mind.
• With growing population and energy demand India will have to import coal from other countries like Australia and
USA, to meet the demand and for it we have to make agreements with the governments.
• In coal mining PSU’s have strong hold in the market, to meet the global competition and domestic demand govt
must plan to push forward private sector so that we can make most out of the resources we have.