There's not much about Partha Bhattacharyya, the chairman of Coal India, to suggest he would ever have to take on the mafia. The head of the world's biggest coal producer lives in Kolkata's upmarket Alipore district and boasts membership of all three of its elite clubs: the Calcutta Club, the Tollyganj Club and the Bengal Club. But less than five years ago, as the managing director of Bharat Coking Coal Limited (BCCL), a Coal India subsidiary, Mr Bhattacharyya was forced to take action against India's notorious coal dons. "I was in one of the regional companies, BCCL, which definitely does have its own share of mafias," he says. "At the time of loading, some extraneous elements used to come in and load bad coal, or load less coal, or load more coal." Mr Bhattacharyya brought together the local police, the state government and Coal India's own central industrial security force (CISF) to thwart the illegal activity. So when a train came to the siding, "our CISF was there, and with this action things were controlled to an extent", he says. In a way, Mr Bhattacharyya does have fighting in his blood. During the Second World War, his father, Binoy Krishna Bhattacharyya, fought with Japanese troops against the British as part of the Indian National Army. The elder Mr Bhattacharyya was jailed until a nationwide protest led by Mahatma Gandhi secured his release. "He was a fiercely nationalist person," Mr Bhattacharyya remembers. "He does have a lot of influence in the family and that runs through us all." But it is policy work rather than mustering armed guards that the son enjoys the most. When asked for his career highlight, Mr Bhattacharyya says it was negotiating a loan with the World Bank. "That was 1993 and 1994, and over two years I spent about five weeks in the World Bank offices in Washington," he says. Mr Bhattacharyya believes policy has been more successful than force with the coal mafia, especially in BCCL's home of Dhanbad where the interplay between industry and politics is often murky. What works better, he argues, is the e-auction system he pioneered. "The second type of mafia operations is to take coal from the 'coal linkage' [government rationing] system and then sell it on the black market. That portion of coal that they used to grab, we offered that coal through a transparent, internet-based system." The e-auction system helped Mr Bhattacharyya bring BCCL into profitability in the financial year that ended in March 2006 for the first time in Coal India's 35-year history, and has since been rolled out across the company. For a Coal India "lifer" who has spent 32 years climbing the ranks of the company, Mr Bhattacharyya has unexpectedly emerged as a reformer. "He is too smart by half," says a former Coal India executive with a laugh. "He's a very imaginative chap and he's tried to do a lot of new things for the company." It was Mr Bhattacharyya who, in 1996, as head of corporate treasury, led the capital restructuring that freed the company from crippling debts. "Since then Coal India has not looked back," he says proudly. In Oct 2007, he replaced the linkage rationing system with a "new coal distribution policy" which gives coal users a fuel supply agreement (FSA) that is enforceable, like a standard contract (although, so far not many FSAs have been agreed to and the concept has yet to be introduced to the power sector). And more recently, Mr Bhattacharyya put out international contracts to build coal washeries, develop new underground mines and restart abandoned ones. He has also begun importing coal and buying mines from overseas. Today, he focuses on raising Coal India's profile. "We are the world's largest coal mining company: the top two Chinese ones, taken together, are the same size as Coal India," Mr Bhattacharyya says. "We feel that it is necessary for people to know the strategic relevance of this company." The 404 million tonnes of coal the company produced last year made up 46 per cent of India's energy use. That is the energy equivalent of producing 2.3 million barrels of oil a day, about the same as the UAE. The next big step will be floating a 5 per cent stake on the Bombay Stock Exchange, preparations for which, Mr Bhattacharrya says, will begin in the next couple of months. "It will make us the fourth or fifth-largest Indian company with a market capitalisation of about US$30 billion (Dh110.17bn)," he says. "But I think we can do better. I think we can be third or fourth." But would India's coal industry be better if it wasn't run by a public sector monopoly? "I would not agree with that," he says abruptly. "It's not as if the company has not reformed." Mr Bhattacharyya says the number of staff has shrunk drastically from its 1988 peak of 676,000, and last year he sold coal at an average of $20 a tonne. "This is possibly the cheapest price at which coal sells anywhere in the world and yet I made at least $2bn in profits before tax," he argues. "Arguably, we are one of the most efficient coal-mining companies in the world." But the head of the India energy practice at one of the big four international accountancy firms disagrees with this sunny prognosis: "The price at which you can source coal from Coal India will be 50 per cent to 100 per cent higher than a private sector miner could do it." Coal India is also failing badly to keep up with India's growth. China's largest coal mining company, Shenhua Energy, produced 17 per cent more coal last year than in 2007. Coal India increased production by just 6.4 per cent. This failure to raise production means many customers are not getting near what they are supposed to under their linkage agreements, making unreliability a big problem. Mr Bhattacharyya defends his company from these criticisms: "This linkage means a sort of a 'best effort'. Unless it is converted into a fuel supply agreement there is no contractual binding." According to a former senior executive from Coal India's anti-corruption wing, the "vigilance department", there are also limits to Mr Bhattacharyya's ability to stamp out corruption in a company notorious for it. "The problem at Coal India starts from the top," the former executive explains. "The (coal) ministers used to fix up targets with the chairman and each of the managing directors. Coal has become one of the main sources by which money is funnelled to the political parties." Mr Bhattacharyya says that "is simply absurd". "At least I have not faced such a situation," he says. "I've been chairman here for more than two-and-a-half years and I have never seen this and it never happened when I was managing director of BCCL. If this has happened at some point of time in the past, it would be an isolated case." But Mr Bhattacharyya's predecessor, N K Sharma, was sacked in 2003 when the then coal minister, Karia Munda, claimed to have uncovered a system of kickbacks and contract over-invoicing. In 2007, the South Eastern Coalfields subsidiary was investigated by India's Central Vigilance Commission after it was claimed that 20,000 tonnes of coal a day was being skimmed off. The vigilance official says that between 15 per cent and 20 per cent of the value of what the company produces is siphoned off. If true, that means about a dollar is lost to corruption for every dollar the company makes in profit. Mr Bhattacharyya acknowledges that's a problem. "To the extent that there is corruption in society, the coal sector is a part of the society," he says. "We have a fairly strong vigilance operation. Action has been taken against some senior officers as well where they have been found to be indulging in irregularities." But he seems shocked at suggestions these senior executives should be dismissed or publicly named when found guilty of fraud. Mr Bhattacharyya prefers less public punishments. "Losing their job!" he exclaims. "I don't think coal people would take such drastic decisions where they can lose their jobs. "It's not good idea to publish these things, because we don't want to further embarrass the fellow. He's already embarrassed by whatever punitive action has been taken." The former vigilance department executive says Mr Bhattacharyya is one of Coal India's most honest chairmen. "He's not a very dishonest chap. But to survive there, he needs the patronage of the minister." He says Mr Bhattacharyya's ability to combine a modern business outlook with the requisite instincts to survive the labyrinth of the Indian public sector is his, and Coal India's, greatest strength. "He's the best possible person they could have got at this stage because he can manage professionally, but also politically." email@example.com
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