Coal India under fire over delay in ERP rollout

There’s more to the mess Coal India finds itself in.

Even before it has come to terms with the presidential directive to sign fuel supply agreements with power companies for 20 years, the coal producer’s failure to implement a much delayed plan to create a robust IT network connecting every mine, tracking every customer and staff, which could prevent pilferage of precious coal, is now being questioned.

The company had floated the tender, titled ‘Supply, Implementation of SAP ERP and IT infrastructure along with post-implementation support’ worth close to `700 crore, way back in July 2010. However, the project is yet to be awarded.

“Till date, Coal India management could not open the technical bids. The ministry is taking much longer to decide the fate of this tender. The project was to implement ERP (enterprise resource planning)  to bring in operational efficiency, streamline business process and transparency. This could also stop coal leakage and help in proper reporting of production data,” said an official of an IT company.

Following publication of the tender, two consortiums — one with Hewlett Packard, Accenture and HCL Info, and another with IBM and HCL Technologies — were shortlisted.

But then, a major IT company raised some objections and a scared Coal India management referred the whole tender document to the Vigilance Commission for vetting and clearance.

Communist Party of India MP Gurudas Dasgupta also raised his voice over the nature of the tender, alleging that it favoured only large multinational IT companies, which further delayed the process.

In its own words, an ERP system is of much importance to Coal India. Its implementation would help reduce operational costs, improve labour productivity as the existing IT infrastructure is outdated, the tender document had mentioned.

Incidentally, CoalNet, an outdated ERP application developed by CMC Ltd decades ago, doesn’t support e-auction and truck dispatch.

“If we are unable to implement such a system within the expected timeframe, or at all, it could adversely affect our business and operations,” Coal India had said in its prospectus for its initial public offering.

For all that, however, Coal India was never keen on improving efficiency through IT solutions. The comptroller and auditor general had made some unkind remarks way back in 2009 about tardy application of CoalNet across all its installations and mines even after seven years.

There is now a ray of hope though.

Singareni Collieries, the PSU whose chief Narsing Rao has just been selected to head Coal India, was the first public sector mining company to implement a state-of-the-art ERP system, a Coal India official pointed out. Needless to say, Singareni has been reaping its benefits for some time now.