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Coal India undermined by basic equipment flaws

Published on Jul 25, 2014 6:12 PM

NEW DELHI (REUTERS) - As Prime Minister Narendra Modi's government looks to shape up Coal India Ltd for a potential major restructuring, the world's biggest coal miner still faces basic problems: it does not have enough mechanical shovels, dumpers and explosives.

The new government, which has a 90 percent stake in the company whose total market value is about US$40 billion (S$ 49 billion), is exploring a break up and opening up the sector to foreign investment to boost output and cut imports, sources have said.

But the firm, which accounts for more than 80 per cent of India's production and employs 350,000, has not met its output target for years, ensuring the country remains the world's third-largest coal importer despite sitting on huge reserves.

A failure to boost efficiency could threaten long-run plans to spin off some of the seven units of the coal miner, a vital part of the government's reform strategy.

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