Coal eAuction: Business Marketing Case Study

Powerful Essays
Topics: Coal, Coal mining
Group 5- Coal E-Auction
Business Marketing- Case Study

9/4/2013
Great Lakes Institute of Management, Gurgaon
Ankush Vashisht, Anurag Kashyap, Kanika Matta, Rejith Ravindran, Shalabh Shrivastav

Introduction:

Mining in India is a major economic activity which contributes significantly to the economy of India. The GDP contribution of the mining industry varies from 2.2% to 2.5% only but going by the GDP of the total industrial sector it contributes around 10% to 11%. India has the fifth largest coal reserves in the world. Coal with a proven reserve of 860 billion tonnes is mined the most in the world. At the same time, the demand curve for this sector is always on the rising side. The power sector is the largest consumer of coal followed by the iron and steel and cement segments.
Apart from the major coal consumers there are other smaller sectors which need coal for their operations. Coal India Limited which is the controlling arm of all the coal business in India is required to meet the growing needs of the demands from all sectors. Coal is primarily being transported through roadways, railways and through carriers. An innovative method of transporting coal through slurry pipelines is also under consideration in India to be implemented on a larger scale.

Problem in coal marketing:

Coal Marketing in India has seen a lot of changes since the mining industry began flourishing. All the coal was supplied to the buyers through the Fuel Supply Agreement (FSA). Initially in sectors other than the major three like power, steel and cement, there was a fixed price regime, and corner black market premium under a quota system where permits were given on a first-come, first-served basis. The normal buyers had to pay a lot of extra money to the mafia who had their claws firmly on the coal logistics. The government came up with a solution of introducing E-auctioning of coal which would be a more equitable and rational marketing system.
By introducing

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