Most significant success was restructuring govt loan to CIL
Feb 21, 2011
Looking back: Bhattacharyya says his inability to get CIL’s unionized labour to participate in its IPO was one of his failures at the company.
On Friday, Partha Sarathi Bhattacharyya, chairman, Coal India Ltd (CIL), boarded a small cruise ship along with key officials of his company and the coal ministry to discuss in seclusion the miner’s road map for the next five years. This was his last key meeting as CIL chairman before he retires at the end of this month. Bhattacharyya’s legacy will last for at least five more years, say CIL officials.
Widely regarded as a turnaround man, Bhattacharyya joined CIL in 1977 as a management trainee in the finance department, after a postgraduation in physics from Kolkata’s Jadavpur University. In 1996, he was tasked with preparing the blueprint for restructuring the government’s loans to CIL. The plan was key to CIL becoming profitable. Another high point of his four-and-a-half-year stint as CIL chairman is the company’s initial public offering of shares last year—the biggest till date in the Indian securities market.
It is unlikely that Bhattacharyya will hang up his boots immediately—there are offers from various companies—but right now, he’s looking forward to at least a month of gardening leave, Bhattacharyya said in an interview. Edited excerpts:
What, according to you, were your biggest failures?
One failure, I would say, was the inability to deliver a satisfactory permanent solution to the outstanding environment and forest issues restricting expansion of our mines. Restrictions were imposed despite CIL creating forest cover on at least 2.5 acres of land for every acre of forest that its collieries have consumed. Till now, CIL has created 30,000 acres of new forests, and some of the forests that we have created have been declared “no go” areas.
The second failure was my inability to ramp up underground mining in a significant way though we had identified it as a thrust area in 2007. We arrested the decline in production and the huge losses from our underground mines between 2007 and 2009, but since then, the progress has been very slow for various reasons.
That apart, I wasn’t also able to resolve to my satisfaction the manpower crisis in CIL. For 10 years till 2007, there was no recruitment. There was a huge manpower shortage, especially in the middle-management level, when we began hiring in 2007. In two years till 2009, we hired some 1,500 people, but with that we only managed to offset the ongoing annual attrition. There are some 19,000 sanctioned posts, but CIL, along with its subsidiaries, has only 15,500 people.
The last one, I would say, is my inability to get our unionized labour to participate in CIL’s IPO (initial public offering). They should have also got a chance to share the wealth that they have created for the nation, but that didn’t happen despite the IPO being so successful.
What are the key challenges of being CIL chairman?
Well, CIL is a huge corporation, and to keep a close tab on every corner is a big challenge. Hundreds of things happen every day, and many of them, unless controlled, could spin out of hand and derail plans. You need to maintain a continuous information system to address this problem.
I used to spend a lot of time every day talking to our people on the phone. We do not always discuss business, but unless you engage them in a freewheeling dialogue, very frequently you couldn’t get them to share their problems immediately as they arise. The other key challenge, I would say, is to set the objectives for a corporation as huge as this.
Until you took over as chairman, CIL was widely seen as hopelessly corrupt. Have you managed to weed out corruption from CIL?
CIL has never been institutionally corrupt; the public perception was different because of the colour of the commodity that we sell. If at all, corruption (in CIL) is a problem at an individual level.
Yet, nevertheless, what we have managed to do in the past few years is no mean achievement. We have brought in a great deal of transparency and fairness in high-value procurements. We began a practice of emailing the draft NIT (notice inviting tenders) to all potential participants to build upfront a consensus on terms and conditions of the tender, thereby enhancing participation and competition.
This reduced court cases, and to a great extent expedited the process of awarding contracts. I remember South Eastern Coalfields (Ltd) had taken 2-2.5 years to award a high-value contract. We now take six–nine months to award such contracts.
That apart, we signed an integrity pact with Transparency International in 2007-08, which allowed us to bring in independent external monitors (IEMs), from outside the organization to deal with complaints in procurements. The IEMs are people who have held important positions and have excellent integrity track record. So, instead of going to court, the aggrieved vendors could approach them for redress of their grievances over any tender. This, too, helped improve the pace at which we now select vendors.
Further, many of our manuals and internal guidelines were found to be outdated. We decided to upgrade them on a continuous basis.
What are your most important successes?
I would think the IPO. Well, it certainly was one of the high points, but my first and one of the most significant successes was restructuring the government’s Rs. 2,229 crore loan to CIL. This happened in 1996. I was only a deputy general manager at that time. Yet, I played a key role in this, and the management backed me. Working almost freehand, I prepared a financial model in about a year and a half. It was on account of that financial restructuring that we managed to get a $1 billion (Rs. 4,520 crore today) World Bank loan. In the end, we drew only $520 million. That financial restructuring was instrumental in turning around CIL...
My other major success was the revival of BCCL (Bharat Coking Coal Ltd). When I took over as chairman of BCCL, the company had Rs. 1,800 crore in accumulated liabilities and it was losing around Rs. 600 crore every year, of which Rs. 300 crore was cash loss. On top of that, production was fast declining, but I managed to turn it around in three years...