Steam boiler is basically a closed vessel into which water is heated until the water is converted into STEAM at required pressure. This is most basic definition of boiler. Fuel (generally coal) is bunt in a furnace and hot gasses are produced. These hot gasses come in contact with water vessel where the heat of these hot gases transfer to the water and consequently steam is produced in the boiler. The percentage of total heat exported by outlet steam in the total heat supplied by the fuel (coal) is called steam boiler efficiency.