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PROJECT REORT ON STRATEGIC MANAGEMENT OF GVK COAL (TOKISUD) CO. PVT. LTD

SUBMITTED BY VISHWESH KOUNDILYA PGEXP/004/2012-14

PROJECT REORT ON STRATEGIC MANAGEMENT OF GVK COAL (TOKISUD) CO. PVT. LTD
Introduction GVK is a leading Indian conglomerate with diversified interests across various sectors including energy, resources, airports, transportation, hospitality and life sciences. It has taken pioneering initiatives across many sectors that it operates in and has overcome every challenge to provide reliable infrastructure to contribute to the country’s growth. GVK’s greatest strength is its highly experienced and proficient in-house talent pool. GVK’s collaboration with global infrastructure leaders has brought international expertise to India reflecting excellence and advancement in all its endeavors. To be the world's premier infrastructure and utilities organization that constantly strives to provide the highest standard of products and services and a sustainable quality of life for all stakeholders.

Vision

Mission

  

We will develop state of the art infrastructure through innovation, quality and high productivity which enriches the lives of people We will invest in our people so as to create future business leaders who espouse our core values and beliefs We will be a socially responsible and environmentally conscious corporate citizen while creating a foundation of sustainable growth for business, stakeholders and the community. Honesty and Integrity Passion for Excellence Respect and care for People Team Spirit Innovation Resources Hospitability Airports Life Sciences

Core Values

    

Corporate Diversification

Energy Transportation

Resources Coal

GVK forayed into coal mining as part of its backward integration strategy to meet the requirements of its thermal power projects. The Tokisud North Subblock and Seregarah block in Jharkhand have been allocated to cater to the coal requirements of Goindwal Sahib Thermal Power Project, Punjab and

other upcoming thermal projects in northern India. Tokisud North Sub-Block This coal block falls in the South Karanpura Coalfield and is located in Hazaribagh district, Jharkhand. It is around 60 km North West of Ranchi, the capital city of Jharkhand and is being developed into a captive coal mine. This project will cater to the coal requirements of the upcoming Goindwal Sahib Thermal Power Project, Punjab. External Analysis
POLITICAL ANALYSIS DEMOGRAP HIC ANALYSIS PESTLE ANALYSIS LEGAL ANALYSIS SOCIOCULTURAL ANALYSIS TECHNOLOGY ANLYSIS ECONOMIC ANALYSIS

Political Analysis

 

The state has been witnessing unstable government for the last two-three years. Mining scam in India (colloquially Indian mining scam) is a series of widespread scams in various orerich states of India, and has generated controversy, which spans encroachment of forest areas, underpayment of government royalties, conflict with tribals regarding land-rights. The spill-over of the effects of legal mining into problems such as Naxalism and the distortion of Indian democracy by mixed political and mining interests, has gained international attention.

Economic Analysis

Indian coal industry is set to witness a great boost in future on back of strong government support and rising mergers & acquisitions of coal miners in overseas market. The presence of vast oppurtunities in coal washeries is also encouraging players to infuse money in them . Recently , de-allocation of

coal blocks and stake sales in PSUs were among the major steps taken by the government to boost production and investment in the coal industry. Socio Cultural Analysis Being a tribe dominated state, nature has been given utmost importance in every sphere of life and culture. Branches of sacred trees are brought and ceremonially planted in the courtyards. Devotees then worship these tree parts associated with gods/goddesses. Karma puja, Jitia Puja, Sarhul are a few examples. Poush Mela or Tusu Fair is a significant occasion celebrated during the Makar Sankranti wherein brightly coloured excellently decorated symbolic artefacts of folk deity are carried by the People. This is a folk harvesting festival. Tusu is a folk belief, not about any God or Goddess, but about a sweet little girl of the tribal folk. The festival takes place as new crops are harvested. The entire festival is a very colourful one. It takes the shape of the allaround festive mood of the tribal people, where everyone takes part. Jharkhand has a population of 32.96 million, consisting of 16.93 million males and 16.03 million females. The Sex ratio is 947 females to 1000 males. The population consists of 28% tribal peoples, 12% Schedule caste and 60% others. The population density of the state is 414 persons per square kilometre of land; it varies from as low as 148 per square kilometre in Gumla district to as high as 1167 per square kilometre in Dhanbad district. As per the 2001 census Hinduism is followed by 68.5% of the population of Jharkhand. Islam is followed by 13.8% of the population and Animisitic Sarna religion is practiced by 13% of the population. Christianity with 4.1% of the population is the fourth largest religious community in Jharkhand. Jainism, Buddhism and Sikhism are all practiced making few less than 1%. Technology Analysis When coal seams are near the surface, it may be economical to extract the coal using open cut (also referred to as open cast, open pit, or strip) mining methods. Open cast coal mining recovers a greater proportion of the coal deposit than underground methods, as more of the coal seams in the strata may be exploited. Large Open Cast mines can cover an area of many square kilometers and use very large pieces of equipment. This equipment can include the following: Draglines which operate by removing the overburden, power shovels, large trucks in which transport overburden and

Demographic Analysis

coal, bucket wheel excavators, and conveyors. In this mining method, explosives are first used in order to break through the surface, or overburden, of the mining area. The overburden is then removed by draglines or by shovel and truck. Once the coal seam is exposed, it is drilled, fractured and thoroughly mined in strips. The coal is then loaded on to large trucks or conveyors for transport to either the coal preparation plant or directly to where it will be used. Legal Analysis Mining Development & Control: Control over allocation of mining rights and their distribution is a very important function which has to be made more transparent & quicker. A single window clearance system would go a long way in ensuring the attractiveness that the potential of the mining sector holds. Infrastructure development & maintenance has to be piggy backed on the mining sector development. Funds have to be allocated to develop active exploration techniques with higher degrees of precision to limit speculation. Social & Environmental Compliance: The industry has a huge social & environmental impact. Adequate measures have to be taken to ensure environmental compliance which will be a key factor on the sustainability of the sector in the state. Along with environmental measures, Land rationing & rehabilitation measures also have to be put in place for ensuring minimum quality of health for the people in the state. Internal Analysis Leadership | Corporate Culture| Operations | Marketing | Finance | HRM Leadership Dr. GVK Reddy is the Founder Chairman & Managing Director of GVK, a diversified business conglomerate within interests across energy, resources, airports, transportation, hospitality and life sciences sectors. Over the years, Dr. Reddy has established GVK as a key infrastructure player with interests in Indian and international markets. Over the years, Dr. GVK Reddy has won many more awards and accolades, some of which include: June, 2012: Dr. GVK Reddy has been recognized as „Power Brands Hall of Fame Corporate Luminary of the Year 2012‟ for his exemplary contribution to the industry and society. “Construction World - Man of the year 2011” award by Construction World “Best First Generation Entrepreneur of the Year

2010” award under the India Business Leaders Awards instituted by CNBC TV-18 “Entrepreneur of the Year Award 2009” from Economic Times Under his leadership, GVK won the “Most Promising Infrastructure Company of the year 2009” award by KPMG – Infrastructure Today Corporate Culture Operations “Work hard, get Reward” mentality • Traditional - Team and department divisions - Very formal and hierarchical Corporate headquarters in Hydrabad, Andhra Pradesh

• Marketing Finance

Importance of liasoning in mining industry. CSR activity in the mining lease area. Report Card PE Ratios EPS (Rs.) Sales (Rs. Cr) Face Value (Rs.) Net Profit Margin (%) Last Bonus Last Dividend(%) Return on Average Equity -48.15 -0.15 7.23 1 - 20.44 25 -0.32

GVK Power and Infrastructure's losses continue to widen due to declining gas supply from Reliance's KG basin.In addition, the revenue reversal for one of its power plants has added to the woes of the company. Its losses widened to Rs 406 crore in FY13 from Rs 1 crore in FY12. GVK's worsening financials and lack of visibility over earnings revival have heightened concerns over its debt repayment. The company's gross debt-to-equity ratio is now 5.4, which is one of the highest in the industry. Its consolidated debt raised three fold in the last two years mainly on account of acquiring additional stakes in Mumbai and Bangalore airports. HRM 1. Recruiting - Online, campus interviews etc. 2. Hiring Online application, Interview Process, Equal Employment Opportunity 3. Training - On Job training 4. Retaining Possibility for career advancemen & Health and Life Insurance

Competitive Positioning

GVK has been allotted coal mines in the year 2002 & they have to start the mining by the year 2012. Now they face the problem of de allocation of coal mines. NEWS CLIPPING The private companies facing the notice include JSPL, GVK Power, Monnet Ispat, Jaiprakash Associates, Dalmia Cement, Birla Corporation, and Chaman Metalics. The Coal Ministry has asked the companies to reply within the next 20 days. “Why the delay in the development of coal block should not be held as violation of the terms and conditions of the allotment of coal block, failing which it would be presumed that your company has no explanation to offer and action as appropriate would be taken for de-allocation of the coal block,” Government asked the mine allottes.

Strategy Map

Core objective Maximise the company's value and the long term return delivered to shareholders by finding, mining and processing mineral resources across the globe

Long term strategy Discovering ore bodies Developing new and existing assets into safe and efficient, large scale, long life and low cost operations Operating in an ethical and socially responsible manner Putting long term sustainable development at the heart of all we do

Strategic pillars
Health & safety Operational & financial delivery Growth & innovation People Communities & environment Customers & markets

Our aspiration
An uncompromi sing approach to safety A zero harm environment Healthy employees, contractors and local communities Consistent delivery of production targets Value based decision making Cash generative assets at all points in commodity cycle Entrepreneurial developer and acquirer of value creating assets Ability to capitalise on changes in the markets Leader in developing and utilising new mining and processing technologies relevant to Rio Tinto's orebodies Employer of choice High performing, engaged and flexible workforce Durable workforce that is well developed for future needs Global needs met with local employees Developer of choice Well positioned for a carbonpriced world Respect for the environment and local communities Supplier of choice Entry and growth in emerging markets Positioned to deliver products that underpin global economic growth Fact based marketing strategy and tactics

Organisational Structure

DGM Mining

Project Head

Mining Dept

Land Acquisition

Electrical

HR & CSR

Management Control System

Production
     

Shift-wise recording of attendance for direct employees Shift-wise man-machine allocation Shift-wise and daily production absorption Integration with finance, maintenance and despatch module Operator and equipment-wise performance analysis Monthly survey and production adjustment

Materials
   o o o o o 

Inventory management Procurement Integration with finance:
Control of vendor bills payments, based on pr-goods receipt notes Automatic updates in accounts payables Budget certification and financial concurrence Adjustment of advance payments to suppliers Bills and letters of credit facilities available

Integration with maintenance module in order to forecast the availability of consumables, ensuring smooth hourly preventive maintenance Reservation of consumables can be done by users



Maintenance


Decision support

           

Comprehensive definition of equipment Online work-order-based monitoring Online heavy earthmoving machinery (HEMM) log details facility Online integration with materials and production Online tracking of equipment performance Effective work-order management Failure analysis Breakdown analysis Equipment status and performance summary Preventive maintenance Maintenance viability analysis Maintenance shutdown planning

Finance
        

General ledgers Accounting Accounts receivables Accounts payables Cash flows Financial administration and controls Fixed assets Budgeting Three-dimensional analysis of expenditure

HR management and payroll
   

Monthly salary calculation and pay-slip generation Periodical processing of bonus, ex-gratia, etc. Maintains detailed employee database Reports on overtime analysis, PF statements, etc.

Risk Management Practices

RISK ANALYSIS AND EVALUATION a) Risk Analysis Method :- An outline of the method and criteria used to analyse and evaluate the risks should be presented. b) Assessment of Risks :- An outline of the method adopted for assessing the likelihood and consequences of the risks. Two lists should be ranked in a manner which indicate matters in order of priority ‰ List A - The likelihood of assessed risk occurring and ‰ List B - The magnitude of the consequences of the risk should it occur c)Identification of Unacceptable Levels of Risk Each risk reported to either List A or B is to be evaluated as being either acceptable or unacceptable according to criteria determined at the mine site. d) Unquantified Hazards Where data is unable to be substantiated by either scientific of historical means, assumed risk data should be clearly recorded. The assumed figures will need to be confirmed by direct measurement as soon as reasonably practical and if necessary used in a review of the risk assessment. e) Consensus Matters All personnel listed in section A(c) above should sign off the final report of the risk assessment. Where consensus is not reached on agreed method to achieve an acceptable level of risk, the concerns of dissenting persons must be recorded in the final report.

Strategy Evaluation

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