New tendering process might help Coal India in saving Rs 1,000 crore

KOLKATA: Coal India hopes to save more than Rs 1,000 crore by implementing a new tendering process for its procurements, aimed at broadening margins and contributing to net profit starting this year.

The procurement process is shifting to a reverse auction method on an electronic platform, a senior Coal India official said. The company has already saved close to Rs 600 crore in purchasing explosives for a two-year contract period. Last year, Coal India spent almost Rs 1,500 crore on buying explosives.

In the reverse auction method adopted by Coal India and its eight subsidiaries, a ceiling price is fixed by the company and sellers compete to win a contract by reducing prices. The lowest bidder wins.

“It is a transparent process conducted electronically in which the lowest price offered by a party is visible to all participants. Competing sellers are allowed to rebid with lower prices, thus pulling down the cost of procurement,” the official said.