Company report

Nat Resources & Energy Metals & Mining
Equity – India

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Global Research

Coal India (COAL)
Neutral (V)
Target price (INR) Share price (INR) Potential return (%)
Mar HSBC EPS HSBC PE Performance Absolute (%) Relative^ (%) 2011a 17.30 22.7 1M -0.4 -2.1 2012e 25.25 15.5 3M 7.0 12.1

N(V): Huge demand; will supply keep pace?
425 392 9.1
2013e 28.37 13.8 12M

 Power projects solely relying on COAL will require incremental c150mt by FY17e; MoEF needs to expedite clearances  Our indepth analysis of current and new mines suggests COAL will produce at least an incremental 127mt by FY17e  Remain Neutral (V) with target price of INR425; stock needs fresh catalysts
MoEF needs to expedite clearances — demand-side pressure mounting. Our analysis of demand from incremental power projects over FY12-17 (depending solely on COAL supplies) suggests incremental demand for c150mt (from c347mt to over 500mt pa by FY17). We believe the Ministry of Environment and Forests (MoEF) will need to expedite clearances for this demand to be met. Incremental coal production of c127mt possible by FY17e — c110mt will have to be from new projects. We believe better utilisation of existing mines can add c20mt of incremental supplies (specifically from Singrauli, Talcher and Central Coal fields), but a large part of incremental supply will have to come from new projects. Our detailed analysis of approved large projects for COAL (see pages 8-13) suggests that this is possible (from mines under MCL, CCL and NCL) if clearances are expedited (most mining projects are at some stage of environmental or forest clearance). The recent lifting of the moratorium on projects in IB Valley and Singrauli coal fields is a case in point. We however note that even if these capacities get commissioned on time, imports will still increase to 330mt by FY17 (currently 93mt) as coal demand from power projects will outstrip supplies. In addition, if the MMDR Bill gets implemented as reported in the media, COAL would have to raise product prices 8-9% over three years to offset the costs. We like the company, but the stock needs fresh catalysts. Given the strong price movement since its IPO (up c60% while the Sensex is down 10%), we believe valuations are stretched and the stock needs fresh catalysts — such as higher-than-expected price rises in FY12, improved logistics, or a higher proportion of coal sold through e-auctions — but given the lack of visibility, we have not factored these into our earnings estimates. Maintain Neutral (V) rating and target price of INR425 based on a combination of DCF and earnings-multiple-based valuation. At our target price, COAL would trade at 15x FY13e EPS (current PE of 15.5x) and 9.2x FY13e EV/EBITDA. Upside risks include higher-than-expected price increases, sale of beneficiated and e-auction coal; downside risk is lower-than-expected offtake due to logistics constraints.

Note: (V) = volatile (please see disclosure appendix)

8 July 2011
Arun Kumar Singh* Senior Analyst, Indian Power Utilities HSBC Securities and Capital Markets (India) Private Limited +9122 2268 1778 arun4kumar@hsbc.co.in Jigar Mistry*, CFA Analyst, Indian Metals and Mining HSBC Securities and Capital Markets (India) Private Limited +9122 2268 1079 jigarmistry@hsbc.co.in Murtuza Zakiuddin* Associate Bangalore

View HSBC Global Research at: http://www.research.hsbc.com *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: HSBC Securities and Capital Markets (India) Private Limited

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

Index^ Index level RIC Bloomberg
Source: HSBC

BOMBAY SE SENSITIVE INDEX 18,727 COAL.BO COAL IN

Enterprise value (INRm) Free float (%) Market cap (USDm) Market cap (INRm)
Source: HSBC

1917447 10 55,786 2,476,962

Coal India (COAL) Metals & Mining 8 July 2011

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Financials & valuation
Financial statements Year to 03/2011a 03/2012e 03/2013e 03/2014e Key forecast drivers Year to Production (MT) Sales (MT) ASP (INR/t) 03/2011a 431 424 1,178 03/2012e 440 440 1,387 03/2013e 466 458 1,465 03/2014e 490 478 1,505

Profit & loss summary (INRm) Revenue EBITDA Depreciation & amortisation Operating profit/EBIT Net interest PBT HSBC PBT Taxation Net profit HSBC net profit Cash flow summary (INRm) Cash flow from operations Capex Cash flow from investment Dividends Change in net debt FCF equity 128,224 -24,750 -22,566 -33,995 -73,178 76,306 188,827 -40,000 -38,000 -42,712 -108,115 119,197 228,312 -30,000 -28,000 -51,428 -148,883 165,513 255,298 -31,094 -29,094 -60,145 -166,059 188,206 528,958 161,410 -16,729 144,681 18,963 164,626 165,228 -55,954 108,673 109,275 645,965 225,738 -18,226 207,512 32,169 241,266 241,266 -81,752 159,514 159,514 709,214 249,820 -19,844 229,976 39,567 271,128 271,128 -91,963 179,165 179,165 761,774 278,310 -21,256 257,054 49,819 308,458 308,458 -104,713 203,745 203,745

Valuation data Year to EV/sales EV/EBITDA EV/IC PE* P/Book value FCF yield (%) Dividend yield (%) 03/2011a 3.8 12.5 22.7 7.4 3.1 1.0 03/2012e 3.0 8.5 15.5 5.5 4.8 1.2 03/2013e 2.5 7.1 13.8 4.3 6.7 1.5 03/2014e 2.1 5.8 12.2 3.4 7.6 1.8

Note: * = Based on HSBC EPS (fully diluted)

Price relative
520 520 470 420 370 320 270 2010 2011 2012
Coal India Limited Source: HSBC Rel to BOMBAY SE SENSITIVE INDEX

Balance sheet summary (INRm) Intangible fixed assets Tangible fixed assets Current assets Cash & others Total assets Operating liabilities Gross debt Net debt Shareholders funds Invested capital 0 150,611 643,960 458,623 813,973 408,178 15,536 -443,087 333,172 -72,230 0 172,385 757,981 566,738 947,768 430,171 15,536 -551,203 449,974 -66,543 0 182,541 915,875 715,621 1,113,817 473,484 15,536 -700,086 577,711 -90,690 0 192,379 1,089,420 881,680 1,295,201 511,267 15,536 -866,145 721,311 -111,148

470 420 370 320 270 2009

Ratio, growth and per share analysis Year to Y-o-y % change Revenue EBITDA Operating profit PBT HSBC EPS Ratios (%) Revenue/IC (x) ROIC ROE ROA EBITDA margin Operating profit margin EBITDA/net interest (x) Net debt/equity Net debt/EBITDA (x) CF from operations/net debt Per share data (INR) EPS reported (fully diluted) HSBC EPS (fully diluted) DPS Book value 17.20 17.30 3.90 52.75 25.25 25.25 4.90 71.24 28.37 28.37 5.90 91.46 32.26 32.26 6.90 114.20 -8.6 -154.7 36.9 14.3 30.5 27.4 -132.9 -2.7 -9.3 -197.7 40.7 18.2 34.9 32.1 -122.4 -2.4 -9.0 -193.3 34.9 17.4 35.2 32.4 -121.1 -2.8 -7.5 -168.2 31.4 17.0 36.5 33.7 -120.0 -3.1 12.6 23.5 23.2 14.1 11.2 22.1 39.9 43.4 46.6 46.0 9.8 10.7 10.8 12.4 12.3 7.4 11.4 11.8 13.8 13.7 03/2011a 03/2012e 03/2013e 03/2014e
Note: price at close of 06 Jul 2011

2

some of the other major mines at Singrauli. we believe they will be operational by FY17.Coal India (COAL) Metals & Mining 8 July 2011 abc Can supply increase?  Improved capacity utilisation at existing mines can add an additional c20mt to COAL’s annual production in the next 3 years  Reviewing the progress on 263mt currently approved projects. in our view. However. Since the projects have incurred capex in excess of 20-25%. We have analysed the supply and demand drivers for COAL and give three key reasons for our conclusions: 1. While some of the mines are operating at higher than 100% capacity. some of these projects are stuck either at the forest clearance or environmental clearance stage or fall under the no-go areas. we expect an additional c110mt pa increase in production by FY17  COAL has a large commitment for supply. Our mine-level analysis suggests that the company should be able to increase annual production by 20mt in the next three years through improved capacity utilisation. Talcher and Central coal fields are operating below 90% of their capacity. Capacity expansion plans in place. Analysing the last update provided by the Ministry of Coal (MOC) and the issues surrounding the production increase. we believe downside risk to our estimate of COAL’s production is limited while upside to our estimate is a strong possibility. Headroom for increase in production available through better capacity utilisation COAL has some headroom from its currently operational mines. 2. can be operated at higher capacities to achieve higher production by COAL. Exhibit 1 provides a summary of capacity expansion by the major subsidiaries of COAL. These mines. which puts additional pressure on MoEF to clear its expansion projects COAL can beat our production estimate in the medium term While we see COAL facing numerous challenges in increasing production. These currently account for 191mt of expansion projects with a capex plan of INR88bn. CCL and NCL. of which 24% was incurred by December 2010. 3 . We expect these expansion plans to contribute at least c110mt of production annually by FY17. especially related to no-go areas. to contribute at least c110mt of production annually by FY17e COAL currently has 263mt of large size approved projects along with capex approval of INR127bn. we believe the bulk of the increased production will come from the coal fields of MCL.

247 271. the media reported that the Group of Ministers (GoM) had approved the draft bill of the Metals and Mining (Development and Regulation) Act. Unprecedented demand to put pressure on MoEF COAL’s current commitment to the power sector is 347mt in FY12. On our estimates.963 179.758 2. demand pressure on COAL is huge as we expect demand from the power sector dependent on COAL for its supplies to exceed 500mt pa by FY17. However. We assume that these royalty payments (like other royalties) will be tax-deductible. Exhibit 2: Scenario analysis in case of the MMDR bill gets cleared in its existing form.165 Post duty 729. Note that this is purely demand from domestic linkage-based power plants dependent on COAL for supplies and excludes demand from captive and imported coalbased plants.192 Capex (till Dec 2010) 3. Pre duty 673.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 1: Summary of capacity expansion in major subsidiaries of COAL Company MCL CCL SECL NCL Total Excl.764 -402. COAL will have to increase product prices by c89% over the next three years to offset the increase in costs due to these payments (see Exhibit 2).390 271. in the scenario that this provision is as “plain vanilla” as the media reports.833 10.963 179. We expect issues related to clearances to get resolved in the medium term as a significant production increase by COAL is stuck due to these issues and hence a production ramp up is likely. in our view.000 24.4% Exhibit 2A provides our sensitivity analysis of the impact of price and volume increases on EPS for FY13. Thus.878 6.128 0 271. SECL Source: Ministry of Coal Incr Capacity (mt) 115 51 45 25 236 191 Capex (INRm) 33. Therefore. If we consider its commitment for supplies to the proposed power capacity in the 12th Plan (even assuming 40% of the c130GW projects materialise). we are reasonably certain that COAL will be able to increase its production from 431mt in FY11 to 559mt in FY17 (unchanged). (MMDRA) and that coal companies would be required to share 26% of their net profits with people affected by the dislocation (applicable to existing mines as well). The Bill will reportedly go before ______________ Volume _______________ -10% -5% Base 5% 10% -45% -35% -24% -13% -3% -34% -23% -12% -1% 10% -24% -12% 0% 12% 24% -13% 0% 12% 24% 37% -2% 11% 24% 37% 50% 4 . this would mean additional demand for 150mt at current supply ratios.390 327.396 88.951 21. We are yet to see the final draft of the Bill as it is not in the public domain. COAL would likely need to increase prices across products to compensate for these levies.483 23.127 91.774 122. Nevertheless.205 30.165 % Diff 8. FY13 INRm Revenue (net) Less: Costs before tax Profit before tax and royalty 26% royalty (profit sharing) PBT Less: Tax Net profit Source: HSBC estimates 3.374 56. we expect this to be a drawn-out process as it has implications with respect to both a) applicability and b) implementation.118 % 12% 28% 8% 34% 20% 24% parliament during the monsoon session (after having been approved by the Cabinet).128 91. Exhibit 2A: Sensitivity analysis of FY13e EPS to change in volume and price growth Change -10% Prices -5% Base 5% 10% Source: HSBC estimates Implementation of the 26% sharing of net profits On 8 July.418 34.518 -402.

we believe valuations are stretched and the stock needs fresh catalysts – such as a higher-than expected price rise in FY12.6% 466 Off-take of 10mt +30% in 2QFY12 Low Low Very low Medium Low 5 .0 28.Coal India (COAL) Metals & Mining 8 July 2011 abc Maintain Neutral (V) rating and target price of INR425 COAL is likely to benefit from a surge in coal demand in India.9% -7. MoC=Ministry of Coal Base case Potential upside/ (downside) Incremental 10% Incremental 3.9% 7.25 0. Key risks Upside risks include higher-than-expected price increases or sale of beneficiated and e-auction coal.2x FY13e EV/EBITDA.2% 7.50 0.705.4% 7.DCF summary table Particulars Enterprise value Less: Gross Debt Add: Cash & Bank excluding OBR provision Add: Investments Less: Minorities Equity value Source: HSBC estimates. A downside risk to our view is lower-thanexpected offtake due to logistics constraints. Under our research model.3% 8. Exhibit 4: Calculation of target price Method DCF PE EV/EBITDA Target price Source: HSBC estimates Weight 0.0% 7.5% -7. COAL would trade at 15x FY13e EPS (current 15.5% 14. improved logistics or higher proportion of coal sold through e-auctions – but given the lack of visibility.536 392. but supply constraints and logistical challenges limit volume growth. the Neutral band is 10 percentage points above and below the hurdle rate for Indian stocks of 11%.971 INR/Share 367 2 62 1 0 428 Exhibit 6: COAL PE-based valuation PE Multiple FY13e EPS Value per share Source: HSBC estimates 15.6% 4.4 425 Exhibit 3: Summary of sensitivity to various factors not accounted for by us Factor Upside Price hike for DEFG coal in 2HFY12 is more than expected by us MoC allows increased off take of coal through eauction from current levels Production for FY13e is higher than anticipated if classification of No-Go area is dispensed off Inventory of c60-70mt is disposed off over FY13-15 Downside Wage cost higher than expected Source: HSBC estimates.637 326 2.367 8. for stocks with a volatility indicator.0% 10% 11. which implies a Neutral band of 1-21%. COAL is classified as a volatile stock in our research model.5x FY12e EPS) and 9.320.1% falls in the Neutral band. Given the strong price movement since its IPO (up c60% while the Sensex is down 10%). OBR= Overburden Removal INRm 2.829 15. At our target price.25 INR/Share 428 425 417 425 Exhibit 5: COAL .4% Incremental 20mt Incremental 50mt Hiked by another 10% Probability Impact on Impact on 12m FY13e EPS target price 14. We maintain our Neutral (V) rating as the potential return of 9. we have not factored these into our earnings estimates (see Exhibit 3). We value COAL at INR425/share based on a combination of DCF and earnings-multiple-based valuation (see Exhibits 4-6A).

But is the increase in production possible? We understand that increasing production in underground mines is relatively more difficult than in opencast mines. As of March 2010. M-Mixed.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 6A: COAL EV/EBITDA. UG-underground. namely Singrauli (10mt) and Talcher (10mt). F ST I. Wardha Valley. T-Total 6 . W II. OC-opencast. Similarly.637 326 2. North Karnapura. Of those 21 coal fields. D. A. Our detailed analysis of the various coal fields suggests that COAL could increase production at two of the large coal fields. W IV. W III. due to production coming largely from opencast mines. IB Valley.820 2. which is operating at 86% (see Exhibit 8). C. D W III. E B.536 392.Utilisation of 100% or more at six fields .248. capacity utilisation is more than 100% for the top-six coal producing fields (namely Korba. B. ST II. However. B. D. Rajmahal and East Bokaro) with little headroom for any further increase in production. D SC II. COAL operated 471 mines under 21 coal fields. C. F SC I.633. C.Rest six fields Source: Company data 9. E Source: Company data. Exhibit 7 has more details. Hence we look at the coal fields that are largely opencast and can possibly Exhibit 8: List of the mines where COAL can possibly increase production Coal fields Singrauli Talcher Jharia Central India Coalfields Raniganj West Bokaro Total Utilisation Headroom in % Prod (mt) 87% 86% 84% 86% 81% 79% 10 10 5 4 4 1 34 UG 0 4 38 56 84 6 188 OC 10 9 17 15 16 9 76 M 0 0 23 1 7 0 31 T 10 13 78 72 107 15 295 Company NCL MCL BCCL SECL ECL/BCCL CCL Grades of coal C. C.based valuation EV/EBITDA Multiple EBITDA (24m fwd) Enterprise value Less: Gross Debt Add: Cash & bank adj for OBR Add: Investments Less: Minorities Equity value Source: HSBC estimates Exhibit 7: Details of capacity utilisation by mines (as of FY10) INR/Share Coal fields Korba Singrauli Talcher IB-Valley Wardha Valley Jharia North Karanpura Central India Coalfields Raniganj Rajmahal/ Deogarh East Bokaro West Bokaro Kamptee Mand Raigarh Umrer Nand Bander South Karanpura Pench-Kanhan Pathakhera Makum Ramgarh Giridh Total Top 12 coal producing fields Break up . we could expect a possible increase in production at Central India Coal Fields (4mt). ST I A. B. for the other six larger fields.519 Capacity Production (mt) (mt) 75 77 69 45 29 33 24 29 21 11 10 7 5 5 4 5 5 4 1 1 1 462 431 78 68 60 44 29 27 24 25 17 13 13 5 5 5 4 4 4 3 1 1 1 431 403 Utilisation % 104% 87% 86% 98% 100% 84% 100% 86% 81% 118% 121% 79% 105% 92% 99% 80% 77% 92% 96% 81% 62% 93% 94% 356 2 62 1 0 417 Headroom for increase in production through better capacity utilisation We expect COAL to increase its production by an additional 20mt per annum by increasing productivity at some of its underutilised mines. 195 236 201 202 103% 86% increase production. W IV. E. W I.377 15. the average utilisation is only around 86%.0 249. C. leaving headroom for an increase in production.367 8.

capacity utilisation is better for opencast mines than for underground mines.t Standard Norms of CMPDIL Company ECL BCCL CCL NCL WCL SECL MCL NEC Total Source: Ministry of Coal. Exhibit 10 shows details of the capacity utilisation of machinery by various companies.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 9: Capacity utilisation at opencast mines higher (at end FY10) Company Underground ECL BCCL CCL NCL WCL SECL MCL NEC Sub total Open cast ECL BCCL CCL NCL WCL SECL MCL NEC Sub total Overall ECL BCCL CCL NCL WCL SECL MCL NEC Total Source: Ministry of Coal. Annual Plan FY11 Dragline 110% 85% na 99% 100% 100% 92% na 98% Shovel 85% 88% 80% 57% 90% 105% 85% na 83% Dumper 70% 64% 71% 59% 73% 88% 62% na 69% Drill 55% 58% 64% 37% 70% 102% 94% na 64% Dozer 67% 52% 60% 39% 69% 67% 74% na 59% 7 .r. Annual Plan FY11 Capacity (mt) 11 5 2 0 11 18 2 0 50 21 28 46 77 36 91 112 1 412 32 33 48 77 47 109 115 1 462 Production (mt) 8 4 1 0 10 18 2 0 43 22 24 46 68 36 90 102 1 388 30 28 47 68 46 108 104 1 431 Utilisation % 76% 75% 65% na 88% 99% 90% na 87% 104% 85% 100% 87% 100% 99% 91% 89% 94% 94% 84% 98% 87% 98% 99% 91% 89% 93% Exhibit 9 has details of capacity utilisation at underground mines and opencast mines by various companies. As expected. Exhibit 10: % utilisation of machinery in opencast mines (FY11e) w.

804 9 15 6 0 30 Capacity (mt) 89 79 31 0 199 % to total capacity 84% 82% 83% 0% 83% Capex (INRm) 26. COAL had earlier envisaged incremental production of c80mt at the end of FY12 in the 11th Plan.5% 4. to contribute >c110mt of production pa by FY17 We expect COAL to increase production by 127mt over FY11-17. indicating decent progress at these projects.178 6.0% 5. aggregating to incremental capacity of 240mt pa by FY17. 0 9 26 23 22 23 24 127 % growth 0. so overall for 263mt. We have analysed the status of 30 such large projects with incremental capacity of more than 2.199 27.5mt (total 199mt) and also large projects approved prior to FY08 (total 64mt). Exhibit 13 has more details.877 0 20. COAL has approved 69 projects in the 11th Plan until August 2010.0% 4.5mt) 5.159 Capex Of which large (till Aug 2010) projects (>2. which is in line with our forecasts.0% 6.255 41.Coal India (COAL) Metals & Mining 8 July 2011 abc Capacity expansion plans in place. Exhibit 11: COAL production forecasts In mt FY11 FY12e FY13e FY14e FY15e FY16e FY17e Inc (FY11-17e) Source: Company data.5% 4. HSBC estimates What is the probability of COAL beating our forecast? Our mine-wise analysis of COAL’s capacity expansion plans suggests that there is little chance of supply being lower than our forecasts while fasterthan-expected execution of its plans poses upside risks to our forecasts.748 8.5% 4. Exhibit 13: Details of year-wise projects sanctioned along with the funds allocated and expenditure incurred Year Nos.110 0 12.230 60.4% Exhibit 12: Incremental production pa over FY11-17e Details HSBC forecasts (A) COAL firm expansion plans Ramp-up of existing 32 recently completed projects 25 projects to be completed by FY12 20 projects to be completed over FY13-18 Total (B) Diff (A-B) Source: HSBC estimates m tons pa 127 47 48 33 128 -1 COAL guides to produce about 560mt by FY17 assuming it gets environmental clearances for most of its planned projects barring blocks in 'no-go' areas.0% 2. As per the MOC. Also the classification of ‘go’ and ‘no-go’ areas as well as Comprehensive Environmental Pollution Index (CEPI) have made matters worse and limited growth.392 3.053 FY08 FY09 FY10 FY11 (until Aug 10) Total Source: Ministry of Coal 8 . Exhibit 19 has more details.671 Capex (till Aug 2010) 3. most of the projects are on schedule and are likely to be implemented over FY13-17. Production 431 440 466 490 512 535 559 127 Inc. Exhibits 11 and 12 have more details of our production forecasts and the projects being pursued by COAL.728 0 128. however delays due to environmental clearances.217 0 94. forest clearances and land issues not fully in the company’s control have led to lower-than-expected capacity expansion. of which it had incurred about INR21bn (16% of total) till August 2010. For this.202 34. of projects sanctioned 22 34 13 0 69 Capacity (mt) 106 97 38 0 240 Capex (INRm) 33. COAL expects to incur capex of INR128bn.551 5. which is based on the assumption that it will be able to develop most of its approved projects it is currently pursuing (c110mt) and increase productivity at its existing mines (c20mt).

SECL and NCL have majority of expansion Coal Fields Raniganj Mugma-Salanpur Rajmahal Sub Total .Assam Others COAL Total Company Incr Capacity (mt) ECL 9. CCL (51mt).0 15.West Bengal & Jharkhand Jharia Ranigunj Sub Total .West Bengal & Jharkhand Giridih East Bokaro West Bokaro Ramgarh South Karanpura North Karanpura Sub Total .0 WCL 3. Exhibit 14 has details of capacity expansion in various coal fields taken up by subsidiaries of COAL.4 BCCL 0.Orissa North Eastern CF .0 SECL 45.6 0.MCL.Jharkhand Singrauli – MP & UP Wardha Valley Umrer Patharkhera Pench-Kanhan Kamptee Sub Total – Maharashtra & MP Central India Coalfields Korba Raigarh Sub Total – Chhattisgarh & MP IB Valley Talcher Sub Total . We provide the status of each of the mines under these companies in detail in the following pages.0 CCL NCL 51.Coal India (COAL) Metals & Mining 8 July 2011 abc Majority of expansion by MCL and CCL We note that the majority of the expansion is by MCL (115mt).0 MCL NEC 114.0 Source: Ministry of Coal. Highlighted fields represents large expansion 9 .0 263.0 25. Exhibit 14: Summary of capacity expansion at various coal fields . SECL (45mt) and NCL (25mt). CCL.

Lakhanpur Expn.314 1. The process of acquisition of Forest and non-forest land is to be expedited. NA Stage I Forest Clearance pending Mar-15 1. Mar-13 1.Coal India (COAL) Metals & Mining 8 July 2011 abc Mahanadi Coal Fields (115mt) Central Coal Fields (51mt) MCL operates its mines in two large fields namely IB Valley and Talcher in Orissa. Talabira Gopal Prasad 20 15 4. EC is still awaited. Bhubaneswar.Ph-II Basundhara (W) Expn. 4. Exhibit 15 Status review of approved projects having capacity of 2.901 Capex (till Dec 2010) 573 % 12% Ant DoC Status as of March 2011 Mar-16 1. Study).40 Mcum of OB for 15 years to ESSEL Mining Industries Limited & Consortium.2010 to 18. Socio-economic study report has been completed by IRDMS (Industrial Rural Dev. 4. Assessment of PAFs and compensation etc are under progress.02. 3.030 375 860 234 294 0 0 0 754 8% 74% 50% 14% 0% 0% 0% 25% Total 115 33. Shifting of PAFs to be expedite. State Authorities to be persuaded for acquisition of land. The issue may be sorted out accordingly.578 514 11% Hingula Expn.959 30 243 1% 6% Kaniha 10 4. Ant DoC= Anticipated Date of Commissioning 10 . Subsequently. Land allotted for construction of work shop & residential building. Stage-I clearance for 155. Mobilization of equipment fleet. Ananta Expn. 5. Rehabilitation of Jilinda.000 3. Due to an appeal by one of the bidders.073 523 1. LOI issued to Jalaram Transport Company on 07. Exhibit 16 provides details of the current status at some of its mines.18 Ha of forest land needs to be expedited. (Ph-III) Bharatpur Phase-III Balaram Extension Kulda 7 5 5 3 3 9 8 10 4. Exhibit 15 provides details of the current status at some of its mines.& Mgt. Barpali villagers are resisting tree felling at site for identified rehabilitation.50 Mte of coal and 193. 2. A total of 1018 PAFs needs to be rehabilitated.795 1.721 3. Work order issued on July-2010 for 269. CCL operates its mines in six large coal fields in the state of Jharkhand.11 and started production of coal from the month of March-11.10. 2. ESSEL Mining from 29. 2. a Stay Order was issued by the High Court of Orissa on carrying out the work by M/s. 3. Nagarjuna Construction has started removing OB.878 12% Source: Ministry of Coal. EAC meeting held on 29-03-2011 but clearance is awaited. Hensmul and Naraharipur villages are to be expedited for which issue of employment and payment of compensation need to be sorted out on priority basis.477 3. the stay was lifted.165 465 2.2011.3. Government of Orissa is going to allot alternate site in lieu of this plot for Barpali villagers.5mt and above under MCL Project name Bhubaneswari Incr Capacity (mt) 20 Capex (INRm) 4. Ph-II Lingaraj Expn. 2. Acquisition of tenancy land is the main bottleneck in the implementation of the project. The Report is to be authenticated by the Collector. construction of other infrastructure and employment work is under process. 3. NA NA NA Stage I Forest Clearance pending NA NA NA Stage I Forest Clearance pending NA NA Mar-11 Stage I Forest Clearance pending Mar-11 Stage I Forest Clearance pending Mar-12 1. Acquisition of land required for construction of Gopalpur-Manoharpur railway line is under progress. The issue of rehabilitation of PAFs and employment of eligible candidate need to be expedited as it involves 1715 PAPs.

2. North Urimari 3 1. 4. Mar-14 1.2011 to expedite the clearance under ST&OTFD Act.416 1. Requirement of 96.961 25% 93% 58% Karo 4 965 397 41% Konar 4 745 296 40% Total 51 24. Work in progress. Mar-14 1. Forest land: Joint enumeration report completed and was submitted to DFO.54) Ha: Assessment of land compensation is complete and approval of competent authority has been obtained. PR/ EC (15 mt per year): On 27-11-2010 CCL has accorded 'in-principle' approval for the revised combined PR for Ashok OCP (15 mt per year). Acquisition of balance 434.010 % 30% Ant DoC Status as of March 2011 Mar-13 1. The environmental clearance is still awaited.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 16 Status review of approved projects having capacity of 2. Clearance under ST & OTFD would obtained shortly. 3. 3. Action has been initiated for Base Line Economic Survey of PAPs. 5. 2. 5. In first phase 57 PAFs are to be shifted. 2. 3. Camp held from 29-07-2010 to 31-07-2010.C. D.95 Ha): All land has been acquired under CBA Act. 2. Forest land: Stage-ll clearance for initial 8 yrs. 5. Government of Jharkhand requested on 01-12-10 to expedite the issuance of NOC of GMK Jungle Jhari land. 3. MOEF raised some queries.5 mt per year in Phase-I has been prepared by CMPDIL. an interim arrangement for evacuation of coal is to be made so that coal production can be maintained. restricting its rated production to 4. 4. Stage-I clearance for release of balance 228. Coal OS by Surface Miner and OB is departmental and OB removal has already been started and Coal production during 201011 is 0. Base Line Survey: Work awarded to Rural Improvement Charity. work is being hindered due to resistance from locals. Acquisition of balance 174. Incr Capacity (mt) 10 Capex Capex (till (INRm) Dec 2010) 3.758 28% Source: Ministry of Coal. Mar-15 1.86 (Tenancy-389. Hazaribagh was requested on 09.02. Project Implementation plan for first 5 years as a part phase wise implementation Plan for Magadh OC. PAFs have agreed for compensation of INR 1 Lakh as per R&R Policy of CIL. In view of delay in completion of Tori-Shivpur railway line.5mt and above under CCL Project name Ashok Expn. The compensation is to be paid to both Forest Deptt as well as tenants in whose name it was settled earlier. 2. It was also advised to expedite EC for 15 mt per year. a capital provision of Rs 13.95 Ha) of GMK Jangal/ jhari Land. Stage-I I clearance for release of balance 288. Compliance of queries except clearance certificate under ST&OTFD Act. Non-Forest land: 648.35 Crores for approach road from GM office to the project has been approved under Advance Action.110 185 9% Tapin Amlo Expn.02.418 6. Non Forest Land: Constant persuasion with State officials is being done for title related papers to PAFs.89 Ha of forest land.109 669 524 2. Compensation for 31 PAFs is being processed for approval. 20 7. 2.32 + GMK.15 Ha of forest land to be expedited. In view of difficulties faced for implementation of 20 mt per year PR due to coal evacuation problem. Also. Ranchi on 09-08-2010. Next camp is likely to be held in April-2011. About 50% PAPs are to be rehabilitated in first 5 years out of total PAPs involved in the project. Mar-13 1. wherein interim arrangement for coal evacuation through road to Tori railway siding has been suggested.51 Ha): Stage-I clearance was obtained on 23-02-09. Forest Land (226.65 Lakhs approved by CCL. 3. OB Outsourcing: Proposal for OB outsourcing of 28.50 mt per year for 2010-11 could not be met as possession could not be taken of forest land involved. Chatra South on 27-09-10. 2006. 32.810 MCum has been approved by CCL for 3 years from 22-01-2011 onwards and has been awarded. 2. 4. Chatra was requested on 19.67 Ha of forest land to be expedited. Box cut will be made in this forest land and possession of this land is required essentially. 3. Authentication of land including GMK (Jungle-Jhari) land is not yet complete.799 595 33% Magadh Expn. Rehabilitation scheme for 149 PAFs at an estimated cost of INR 22.2011 to expedite the clearance. Ant DoC= Anticipated Date of Commissioning 11 . Compensation payment of Rs 55. it is found to be GMK Jungle Jhari land and taken as Forest Land.112 Mte till June-2010. 6.17 Ha non forest land is to be expedited. However. Consultation with PAFs is being done regularly to expedite physical possession of land. DC.064 122 2% Purnadih 3 2. Non-Forest (89.03.72 Ha received on 1810-2010.259. Rajrappa (RCE) 3 3 3 2. Fauna report is also awaited from wild life department. GOI in October 2010. But after authentication. 2006 submitted to Nodal Officer.2011.29 Ha (out of 89. Clearance under ST & OTFD would be obtained within a month's time. Jharkhand on 26. is to be released by Forest Dept. Proposal for Stage-II sent to MOEF. DFO was requested on January 06. Forest Land: Action has been initiated for acquisition of 111. The targeted coal production of 0. Proposal for construction of temporary approach road has been approved. The project likely to get delayed by about 2 years. Rehabilitation: Assessment of PAPs is likely to be completed by July-2011.26 Ha of forest land to be expedited.647 563 5. Stage-I clearance for release of 277.96 Ha non forest land is to be expedited. 107 employments have been given out of 116 employments approved by CCL. 2011 and 09-02-2011 to expedite the clearance under ST & OTFD Act. under possession as GMK Land. NA Stage II Forest Clearance pending NA NA Mar-16 1. Mar-15 1.00 lakhs has already been made. Non-Forest land: Authentication of entire tenancy land to be completed at the earliest and to be possessed to coal transportation road.

751 3.266 7. Exp of INR0. Exhibit 18 provides details of the current status at some of its mines. Exhibit 17 provides details of the current status at some of its mines. It is advised to sort out the matter at the earliest. Tender for construction of Main CHP floated on 15-02-2011 by CMPDIL. On 04-10-2010 NCL approved construction of main CHP. It was also advised to expedite construction of East and West OB Sub-stations.371 0% 18% Amlohri Expansion 6 11. Krishnashila 5 4 3.Ph-II Incr Capacity (mt) 5 Capex (INRm) 2. Work started on 17th Nov-2010. Exp of INR0.833 % 85% 0% 0% 21% 0% 0% 0% 0% 66% 8% Ant DoC Status as of March 2011 NA NA NA Bud. Dudhichua Expn. Rehabilitation of PAFs and employment issues is to be expedited. 2 1. Procurement of balance HEMM is to be expedited Mar-14 1.5bn in FY11 (16%) Mar-13 1.373 1.5mt and above under NCL Project name Nigahi Expn. Proposed CHP is under review in light of Bina-Kakri Amalgamation Project Report under preparation by CMPDIL. Construction of Main CHP: LOA issued to L&T Ltd on 20-05-2010. Acquisition of balance forest land. is to be expedited. Procurement action for 2 Nos. Overall progress of work is 7% as on Dec-10. Ant DoC= Anticipated Date of Commissioning Exhibit 18 Status review of approved projects having capacity of 2.483 4.334 55% Block B 4 4. of Dragline on 30-09-2009 and Commissioning of 1st dragline is going on as per mutually agreed schedule and supply order for 2nd Dragline placed to HEC on 28-12-2010 Mar-15 1.-II Baroud Expn (Rai West) Jagannathpur (Mahan-III&IV) Kartali East Gevra Expn. Action for acquisition of balance forest and non-forest land to be expedited. 3. NA Bud.483 34% Source: Ministry of Coal. Action for construction of CHP (5 mt per year) is to be expedited Bud.8bn in FY11 (17%) NA Stage I Forest Clearance pending NA Stage I Forest Clearance pending NA Stage I Forest Clearance pending NA Stage I Forest Clearance pending NA Stage II Forest Clearance pending NA Stage II Forest Clearance pending. Ant DoC= Anticipated Date of Commissioning 12 .524 1. Exp of INR1. Supply order placed to HEC for 1 No. 2.435 6. 22 Ha in UP State and 279 Ha in MP State. Due date of opening of tender is 14th April-2011. 2.370 31% Bina Extn. Procurement of balance HEMM to be expedited. NCL operates its mines in one large coal field namely Singrauli in the states of Madhya Pradesh and Uttar Pradesh. Draft NIT for 3 mt per year CHP submitted by CMPDIL and scrutiny completed. Manikpur Expn.Coal India (COAL) Metals & Mining 8 July 2011 abc South Eastern Coal Fields (45mt) Northern Coal Fields (25mt) SECL operates its mines in three large coal fields in the states of Chattisgarh and Madhya Pradesh.356 1. HINDALCO can carry coal through their conveyor system. 160 MM drill is to be expedited 3.416 0 1.594 Capex (till Dec 2010) 0 % 0% Ant DoC Status as of March 2011 Mar-12 Action for acquisition of 386 Ha of forest land and 210 Ha non-forest land to be expedited.215 34.784 10.506 1.9bn in FY11 (14%) NA Stage II Forest Clearance pending Source: Ministry of Coal. EMP clearance for higher capacity is to be expedited. Dipka Expn. Bud.205 427 0 0 288 0 0 0 0 2. 3. Total Incr Capacity (mt) 3 10 5 3 3 3 10 5 4 45 Capex Capex (till (INRm) Dec 2010) 504 4.2011. Exhibit 17 Status review of approved projects having capacity of 2. 2.690 1.5mt and above under SECL Project name Chhal Peima Kusmunda Expn. 2.081 6. Exp of INR0. Site handed over on 16th Aug-2010.118 2. NCL has agreed to the proposal in its meeting held in Feb .774 10.4bn in FY11 (53%). 2. Mar-16 1. CMPDI has suggested arrangement for tapping coal through a transfer point located after the ground bunker from where RPD.409 83% Total 25 30.

0 10.5 8.199 1.0 2.0 4. OC SECL Dipka Expn.5 0.5 4.0 79.392 122 185 669 524 0 375 860 234 294 0 0 288 0 0 1 3.334 1.5 49.Exhibit 19: Summary of approved projects having capacity of 2.690 32.524 1.0 3.0 5.0 8.0 5.Ph-II OC MCL Basundhara (W) Expn.551 32 2.110 12.Ph-II OC NCL Bhubaneswari OC MCL Talabira OC MCL Gopal Prasad OC MCL Kaniha OC MCL Chhal OC SECL Subtotal Magadh Expn.795 1.0 4.010 595 0 573 30 243 514 427 3.0 5.0 5.1 OC ECL Ashok Expn.0 3.9 20.0 5.0 23.0 5. OC MCL Ananta Expn. 1 Delay in land acquisition.0 15.0 NA 18.435 4.0 10.0 20. Annual Plans.053 NA NA 754 397 296 1.266 4.0 3.356 1.0 3.110 2.6 NA 0.0 3. 0 5 Delay in land acquisition.0 25.784 3.0 4.0 5. OC CCL Dudhichua Expn.0 0.217 94.0 4.9 20.5 17.3 1.255 7.165 465 2.0 10. OC CCL Purnadih OC CCL Tapin OC CCL Amlo Expn. (Ph-III) OC MCL Gevra Expn.0 0.109 523 10.0 0.671 1.4bn in FY11 (53%) 0 Acq. Ant DoC= Anticipated Date of Commissioning .5 14.0 0.8bn in FY11 (17%) 0.0 5.370 1. Exp of INR0.9bn in FY11 (14%) 0. Exp of INR0. Ph-II OC MCL Peima OC SECL Kusmunda Expn.689 NA 127. OC CCL North Urimari OC CCL Nigahi Expn.0 10.0 0 0 Bud.5 6.0 0.0 3.0 0.0 2 3 0 Bud.0 88.7 1.0 5.578 504 26.961 0 0 0 2.0 3.1 6. OC NCL Hingula Expn.398 41.0 27.0 2.5 22.0 15.0 0.0 3.0 0.0 3.930 NA 23.0 6.983 FY08 FY08 FY08 FY08 FY08 FY08 FY08 FY08 FY08 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY10 FY10 Ant DoC Initial target for FY12 NA Mar-13 Mar-14 Mar-12 Mar-16 NA Mar-15 Mar-13 NA Mar-14 Mar-13 NA NA NA NA NA NA NA NA NA NA NA NA NA Mar-14 Mar-16 NA NA NA NA NA 2.0 0.0 21.959 4.0 9.5 3.0 3.118 5.416 1.371 6.0 5.0 0.0 0.901 4.0 8.0 0.9 27.3 16.0 5.-II OC SECL Baroud Expn (Rai West) OC SECL Jagannathpur (Mahan-III&IV) OC SECL Kartali East OC SECL Penganga OC WCL Subtotal Rajmahal Expn (17) OC ECL Rajrappa (RCE) OC CCL Lingaraj Expn.0 15.2 NA NA 3.799 2.5 3. Exp of INR0.9 1.5 0.0 9.0 NA 15.0 1.0 2.0 0. 2 3 0 NA NA FY05 FY07 FY07 FY07 FY07 FY07 FY07 Mar-11 Mar-11 Mar-12 Mar-15 Mar-15 Mar-13 Mar-16 Mar-15 Mar-14 OC OC OC OC OC OC OC OC MCL MCL CCL CCL NCL NCL NCL NCL abc Source: Ministry of Coal.0 263.5 79.0 3.5 1.0 15.5 6.3 0.2 7. OC MCL Lakhanpur Expn.483 4.0 10.0 0.0 NA NA NA NA NA NA NA 15.0 20.0 2.0 10.1 31.5 15.506 1.721 3.0 3.081 6. OC SECL Manikpur Expn.030 965 745 7. 4 3 Delay in land acquisition.0 6.538 5.073 4.0 1 Delay in obtaining forest clearance and due to R&R issues.0 20. OC SECL Subtotal Grand total Projects sanctioned prior to FY08 Bharatpur Phase-III OC MCL Balaram Extension Kulda Karo Konar Krishnashila Amlohri Expansion Block B Bina Extn.0 6.0 0.0 20. Grand total Others Overall COAL 13 10.0 3.9 10.064 2.416 11.0 1.0 3.751 3.0 4.5 2. Sanc (INRm) Dec 2010) Date 27 3.0 NA NA 4.9 4.0 7.5 5.0 1.5 31.0 3.359 0 1.5 5.0 20.5 1.215 27.0 10.594 4.5 1.5 10.8 10. Exp of INR1.314 1.0 199.647 563 3.0 5.7 ____________________Year _____________________ Delay FY12 FY13 FY14 FY15 FY16 FY17 FY18 (yrs) Comments Projects sanctioned from FY08 till Aug 2010 Sonepur-Bazari Block Sec.0 0.1 0.0 5.5 3.5bn in FY11 (16%) Bud.0 64.5 3.0 0.477 3.373 1.5mt and above for COAL Coal India (COAL) Metals & Mining 8 July 2011 Project name Type of Mine Company Incr Capacity (mt) 2.409 11.0 Capex Capex (till Rev. of tenancy land is the bottleneck 0 0 1 0 Bud.2 0.6 3.0 5.5 4.

We see evidence of this in the recent lifting of the moratorium on environmental clearance for projects in IB Valley and Singrauli coal fields as well as clearance of five coal blocks in no-go areas.Power stations proposed to be commissioned in FY12 through MOUs Source: Ministry of Coal In mt 347 306 32. demand by power projects from COAL is expected to exceed 500mt in FY17. 14 . In the past two years. Exhibits 21 and 22 provide details of the status of FSAs with the power sector and COAL’s commitment and preference for supplies.Coal India (COAL) Metals & Mining 8 July 2011 abc Unprecedented demand to put pressure on MoEF Analysing the current commitment by COAL to power projects (347mt) and new power projects expected to be commissioned over FY12-17 solely dependent on supplies from COAL. COAL has committed only 41mt of coal due to supply constraints. 306mt stands committed to under legally enforceable FSAs for power plants commissioned until March 2009.5 8. Exhibit 23 provides details of coal required by the power sector from COAL in FY12 for power projects commissioned in FY10-12. We note that COAL is facing severe pressure from its customers (mainly the power sector with 78% of total supplies by COAL) to meet its commitment to supply coal. an additional 43mt over FY11 offtake. Exhibit 20 has details of coal dispatch to the power sector by COAL in the last few years. We expect this to put pressure on MoEF to expedite clearances for COAL’s mines under implementation.Power stations commissioned in FY10 and FY11 through MOUs . Of this 347mt. Exhibit 20 Details of coal dispatch to power sector by COAL in the last few years Year FY08 FY09 FY10 FY11 Target by COAL 280 296 313 335 Off take by power sector 277 294 296 303 % achieved 99% 99% 95% 90% Exhibit 21 Details of preference for supplies to the power sector Supplies in FY12 COAL commitment to supply to power sector in FY12 .5 Exhibit 22 Status of FSAs signed by COAL with the power sector Power plants commissioned Upto FY09 After FY09 till date COAL supplies through FSA on basis of ACQ decided by CEA MOU on basis of ACQ decided by CEA 72 out of 78 power plants concluded FSA No FSA signed until now Penalty trigger is at supplies below 90% of ACQ Source: Ministry of Coal New FSA offers penalty trigger below 50% of ACQ Source: Ministry of Power . COAL has been unable to meet the needs of the power sector largely due to flat production and constraints on offtake.7GW for FY10-12e) having a coal requirement of c75mt in FY12.Annual Performance Document For the power plants commissioned post FY09 linked to COAL for fuel supplies (aggregating to 24.Of which through FSA to power stations commissioned till March 2009 . COAL has offered to supply 347mt to the power sector in FY12 (higher than the 319mt it had indicated earlier).

15 .320 12. COAL is already rationing supplies for power projects commissioned post FY09.552 81.700 24. Exhibit 25 Details of coal blocks falling under ‘no-go’ classification under various coal fields Coal field North Karanpura IB Valley Singaurali Talcher West Bokaro Wardha Mand Raigarh Hasdeo Shoagpur Total Source: Ministry of Coal Location Jharkhand Orissa. MoEF had notified 222 coal blocks across nine coal fields as "no-go" zones in June 2010.725 7.Annual Performance Document Coal linkages prioritised for 12th Plan projects to add further pressure According to data provided by the Ministry of Power (MOP).837 39 126 200 365 146 70 224 357 652 261 0.465 36.56 0. about 129GW of coal-based capacity has been prioritised for coal linkages in the 12th Plan being developed by various power developers. Note that as per Central Electricity Authority (CEA) assessment.593 26 FY11 9. Exhibit 24 has details of coal linkages for 12th Plan power projects and estimated coal requirement to be met by COAL.56 0. Chattisgarh MP. Exhibit 25 provides details.101 29 FY12e* 14. This will add further pressure on COAL to raise its production given the unprecedented demand. According to the MOC.712 75 Exhibit 24 Details of coal linkages for12th Plan power projects and estimated coal requirement to be met by COAL Capacity Requirem Generati Avg Coal % (MW) ent (mt) * on (BU) consumption Commit (kg/unit) men* Central State Private Total @ 40% Projects 11. incremental requirement for coal to be supplied to these projects by COAL will be to the tune of c150mt based on an assumption of 70% commitment to State and Central projects and 50% to private developers. the coal requirement for thermal power plants based on coal linkages for the 12th Plan is 253mt by FY17. Exhibit 26 has details of coal blocks cleared by the Environment Ministry under ‘nogo’ areas.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 23 Details of coal requirement by power sector from COAL in FY12 Projects commissioned in Capacity addition (MW) COAL linked power projects(MW) Coal Requirement (mt)* FY10 6. the Environment Ministry cleared six blocks for power plants in Orissa (part of IB Valley Coal field) including five in ‘no-go’ areas linked to UMPP. UP Orissa Jharkhand Maharashtra Chattisgarh Chattisgarh Chhattisgarh. output from these mines could be of the order of 660mt and can generate around 130GW of power.575 129.56 70% 70% 50% 58% 58% *Coal requirement for projects commissioned in FY12 is for part of the year only.56 0. and which would be c50mt in FY13 and beyond Source: Ministry of Power .56 0. Note: Coal requirement estimated by us is based on assumption of 70% commitment to State and Central projects while 50% to private developers of their total requirement from COAL Source: Ministry of Power for Capacity Some concerns remain Issue of ‘go’ and ‘no-go’ is a major limiting factor Of the 605 coal blocks in India.018 20* Total 30. If we assume even 40% of these projects are commissioned by FY17. MP No of blocks 30 24 29 19 11 16 51 20 22 222 But recent news positive for coal fields in ‘nogo’ areas On 29 June 2011. NTPC and OPGC power plants. banning mining in these areas on environmental grounds.592 51.655 5.

nogo and CEPI Delay in obtaining FC R&R issues Low availability of railway rakes Source: Ministry of Coal.320 MW power plant of NTPC Dulanga Source: Ministry of Coal No of projects 17 17 8 NA Production loss (mt) 39 18 10 10-15 16 . Exhibit 27 Details of production loss due to various factors Reason Delay in obtaining clearances.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 26 Details of coal blocks cleared by Environment Ministry under ‘no-go’ areas Project 4.320 MW power plant of Orissa Power Manoharpur and Generation Corporation (OPGC) Manoharpur Dipside 1.000 MW UMPP Coal block Production loss for COAL Exhibit 27 provides details about the production loss expected in FY12. the main reasons for the downward revision of production targets were delays in obtaining forestry clearances. Meenakshi-B and Meenakshi Dipside 1. and law and order problems. A lack of evacuation facilities in some coal fields and a build up of pithead stocks have also resulted in regulation of production in some coal companies. As per MOC. land acquisition and related R&R issues. Annual Performance Report Meenakshi-A. environmental clearances.

452 22.7% 1.2% 13.5% 3.9% 2.879 279.433 7.505 2.1% 841 796 1.134 1.Coal India (COAL) Metals & Mining 8 July 2011 abc Assumptions and financial statements Exhibit 28: Coal India key assumptions table FY08 Volumes (mt) Production growth y/y Offtake Raw coal .045 975 1.465 5.1% 12.888 18.8% 395 350 46 15 410 3.1% 32.7% 658.0% 12.5% 7.481 2.518 9.485 258.309 2.033 1.833 446.520 326.7% 567.0% 17.2% 8.819 48.247 2.998 35.9% 19.203 147.5% 17.508 72.159 340.450 502.583 2.8% 490 5.1% 8.160 1.FSA + negotiated sales .6% 10.084 11.0% 424 375 49 16 440 3.178 8.E-Auction sales Beneficiated coal Total growth y/y Pricing (INR/ton) Raw coal .690 2. HSBC estimates FY09 FY10 FY11e FY12e FY13e FY14e CAGR CAGR (FY08-11e) (FY11-14e) 379 5.913 883 2.625 511.405 43.199 2.4% 11.0% 454 402 53 24 478 4.4% 380 331 49 15 395 7.0% 13.7% 621.153 15.5% 9.697 1.1% 1.805 2.1% 10.9% 12.543 1.6% 1.5% 12.5% 16.899 2.136 1.810 484.1% 354 325 29 14 368 7.414 1.457 3.0% 3.5% 4.339 10.9% 1.6% 351.E-Auction sales Beneficiated coal Others Total growth y/y Source: Company data.971 613.773 27.0% 440 389 51 18 458 3.7% 18.251 673.263 374.264 89.9% 3.382 1.9% 17 .172 449.0% 410 362 47 15 424 3.1% 7.808 2.6% 440 2.272 2.337 1.4% 9.6% 1.2% 404 6.4% 925 844 1.991 136.385 31.0% 431 0.260 976 10.1% 466 6.7% 1.335 12.8% 297.371 33.775 72.201 387.767 117.4% 4.9% 431 6.711 1.E-Auction sales Beneficiated coal Blended ASP growth y/y Sales (INRm) Raw coal .2% 15.423 61.5% 3.4% 4.450 1.3% 5.FSA + negotiated sales .713 38.622 2.442 723.365 3.FSA + negotiated sales .392 2.1% 413.3% 4.387 17.2% 17.6% 464.333 1.347 1.

3% 34.318 6.560) 2.585 271.6% 23.3 FY13e 709.745 203.2% 69.912 (286) 40.165 179.635 6.3% 35.101 (243.316 17.165 0 179.015 144.3% FY13e 9.0% 30.045) 499.1% FY10 14.745 6.2% 27.316 32.626 40.774 (142.2% 31.321 (753) 1.4% 31.512 32.4% 46.368) 249.954) 108.321) (19.0% 77.2% 32.4 FY10 469.067) 225.2 17.738 (18.820 (19.266 (81.214) 548.285) (2.7% FY11 12.5% 33.236) 117.673 109.949 (16.708 (13.165 6.4 28.4% 11.8% 10.617) 278.8% 36.310 (21.923 (753) 1.3% 12.128 (91.5% 23.8% 98.084 (195.514 0 159.844) 229.7% 40.6 FY11 528.565) 97.4 FY14e 761.779) 161.316 25.5% 18 .458 0 308.585 241.4% 11.2% 137.514 6.668 (204.7% 76.2% 38.6 15.9% 32.963) 179.190) 40.458 (104.976 40.819) (28.754 (792) 1.228 (602) 164.772) 283.5% -5.965 (118.5% 11.565) (29.7% 5.472 26.0% 142.1% 12.316 28.8% 12.673 0 108.1% FY12e 22.353 (265.3% 37.529) 65.647) (31.275 6.961) (3. HSBC estimates FY09 409.593 77.335) (26.4% 38.766 571 98.545) (19.447 (1.413) 585.004 (271.1% 39.336) 344 130.0% 19.077) (5.794) (3.8% 30.256) 257.573 (753) 1.2% 10.1% 37.376) 49.713) 203.331 (46.8% 13.585 165.3 25.8% 46.2% 74.302 6.7% 6.752) 159.8% 25.188) (21.573 28.3% 77.822) (30.044 (104.514 159.867 (537) 144.825 277 78.539) 334.186) 393.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 29: Coal India income statement (INRm) Net Sales Cost of Goods Sold (COGS) Overburden Removal Adjustment Gross Income Employee expense Selling General & Admin exp (SG&A) Other operating expense EBITDA Depreciation & Amortization EBIT Interest income Interest expense Other financial exp/inc HSBC Profit before tax (PBT) Exceptionals Reported Profit before tax (PBT) Income tax Profit after tax (PAT) Extraordinary Items Reported Net income HSBC Net income No.245 (184.5% 40.9% 43.0% 71.266 0 241.2% 9.4 6.681 19.402) (22.789) 1.7% 13.4% 30.3 32.214 (129.7% 10.357) (34.3 FY12e 645.105) (26.729) 144.585 308.1% 19.102 (37.601) (3.410 (16.940 (1.5% 27.1% 142.958 (109.2% FY14e 7. HSBC estimates FY09 19.606 (104. of shares outstanding Reported EPS HSBC EPS (Recurring) Source: Company data.3 Exhibit 30: Coal India trend and margins Trend & margin analysis Sales growth EBITDA growth EBIT growth Reported EPS growth HSBC EPS growth Gross margins EBITDA margins EBIT margins HSBC PBT margins Reported PBT margins Source: Company data.226) 207.626 (55.316 15.128 0 271.745 0 203.337 98.282) (31.2% 16.054 50.

261 21.310 21.491) 258.Subs/Assoc/Investments Change in debt Share buyback/issue Change in other reserves Others Net cash flow Source: Company data.536) 881.172 326 333.680) (21.345 30.059 0 0 0 0 166.343 36.008 (22.770 164.037 FY14e 63.312 (51.037 (4.494 236 258.351 (8.867) (15.610) 115.147 721.680 866.082 8.164 386.909 120.225 (457.127 98.413 (4.799 55.983) 189.465 110.537 (27.755 (19.000) 42.655 (331.732 6.388) 333.730 (4.811 449.458 (50.664 0 (5.746) 2.223 9.300 FY13e 63.732) (227.145) 166.778) 578.087 128.161 FY10 144.266 FY13e 271.990) (1.445) 131.869) 390.470 (24.669) (10.738 551.732 4.907) (1.621 700.475) 450.983) 173.086 160.Coal India (COAL) Metals & Mining 8 July 2011 abc Exhibit 31: Coal India balance sheet (INRm) Share Capital Reserves & Surplus Shareholders Equity Minorities Total Equity Secured Loans Unsecured Loans Total Debt Cash & Equivalents Net (Debt)/Cash Net Block Capital Work-in-progress (CWIP) Deferred tax assets Investments Other assets (net) Total Long Term Assets Inventories Sundry Debtors Loan & Advances Current Liabilities Provisions Total Working Capital Net assets Source: Company data.352 33.330 258.729 26.172 99.458 19 .104 0 0 6.115 0 0 0 0 108.761) (334.536 93.883 0 0 0 0 148.732 10.778 369.104 FY11 164.964) (56.964 (17.054) (46.805) (19.439 67.950 275.226 28.105 21.761) (274.761) (303.099 21.659 (33.094) 52.637 (14.666 18.100) 91.645 36.117) (104.626 (19.772 32.954) (792) 108.115 241.780 87.939 105. HSBC estimates FY09 80.573 61.015 21. HSBC estimates FY09 63.828 144.536) 458.199) (20.583 (18.559) 150.311 326 721.225 (413.099 FY10 63.761) (263.867) (15.658 12.958) (51.428) 148.204 (60.498 FY12e 63.867) (15.567 72.821 (13.983) 153.548 15.333) 0 1.856 30.270) (46.795 30.867) (15.547 577.536) 566.827 (42.088 18.750) 21.991 (30.475 117.045 (16.923) 753 18.099 (1.498 (4.429) (82.669) (10.335 80.637 (4.995) 71.712) 108.983) 181.011) 190.161 0 0 10.059 308.082 8.630 21.363) (55.128 (40.300 (4.904 (40.256 34.008 333.691) (116.164 126.321 200.203 150.883 271.732 8.958) (81.164 658.646 0 2.164 270.686 86.908 0 (616) 0 2.186 (23.312 44.669) (10.256 99.754) 792 16.080 19 190.676 99.417) (261.164 195.637 (14.711 326 578.230 114.145 170.225 (391.974 326 450.963) (753) 187.266) 141.000) 34.977) 2.637 (14.082 9.321) 753 19.225 (495.844 31.730 FY11 63.910 0 2.060) (39.673 99.271 (282.623 443.669) (10.923 150.054) 81.573) 753 21.713) (753) 204.573 226.214 (1.725 (31.266 (32.082 8.911) (91.637 Exhibit 32: Coal India cash flow statement (INRm) Profit before tax Add back: Interest income Interest expense Depreciation & Amortization Others Change in Working Capital Tax paid Net Interest paid Change in Deferred tax liability Cash flow from operations Capital Expenditure Change in other assets Free cash flow (FCF) Dividends FCF post dividend Acquisition .669) (16.082 8.729 67.074) 721.637 (14.331 21.485) 296.052 (11.536) 715.128 FY14e 308.164 514.752) (753) 155.626 FY12e 241.916 190.

20 . certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was. ratings should not be used or relied on in isolation as investment advice. is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Arun Singh and Jigar Mistry Important disclosures Stock ratings and basis for financial analysis HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions. The performance horizon is 12 months. and 2) from time to time to identify short-term investment opportunities that are derived from fundamental. expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily triggering a rating change. which depend largely on individual circumstances such as the investor's existing holdings. regional market established by our strategy team. as appropriate. In addition. investors should carefully read the entire research report and should not infer its contents from the rating. quantitative. HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon. if the stock has been listed for less than 12 months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility.hsbcnet. Given these differences. Rating definitions for long-term investment opportunities Stock ratings HSBC assigns ratings to its stocks in this sector on the following basis: For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or.Coal India (COAL) Metals & Mining 8 July 2011 abc Disclosure appendix Analyst Certification The following analyst(s). the stock must be expected to underperform its required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as Volatile*). and/or strategist(s) who is(are) primarily responsible for this report.com/research. In any case. and although ratings are subject to ongoing management review. technical or event-driven techniques on a 0-3 month time horizon and which may differ from our long-term investment rating. The price target for a stock represents the value the analyst expects the stock to reach over our performance horizon. change of volatility status or change in price target). economist(s). Stocks between these bands are classified as Neutral. *A stock will be classified as volatile if its historical volatility has exceeded 40%. the implied return must exceed the required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as Volatile*). HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's existing holdings and other considerations. Notwithstanding this. However. For a stock to be classified as Overweight. Details of these short-term investment opportunities can be found under the Reports section of this website. For a stock to be classified as Underweight. because research reports contain more complete information concerning the analysts' views. Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research report. HSBC has assigned ratings for its long-term investment opportunities as described below. As and when HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at www. risk tolerance and other considerations. This report addresses only the long-term investment opportunities of the companies referred to in the report.

As of 31 May 2011. this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of investment banking services. 1 2 3 4 5 6 7 8 9 10 11 HSBC* has managed or co-managed a public offering of securities for this company within the past 12 months. Historical volatility is defined as the past month's average of the daily 365-day moving average volatilities.BO) Share Price performance INR Vs HSBC rating history Recommendation & price target history From N/A Target Price To Neutral (V) Value 425. however. At the time of publication of this report. At the time of publication of this report. as detailed below. A covering analyst/s or a member of his/her household is an officer. Rating distribution for long-term investment opportunities As of 08 July 2011. A covering analyst/s has received compensation from this company in the past 12 months. this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-investment banking-securities related services.00 Date 21 June 2011 Date 21 June 2011 412 392 372 352 332 312 292 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Price 1 Source: HSBC Source: HSBC HSBC & Analyst disclosures None of the below disclosures applies to any of the stocks featured in this report. HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. A covering analyst/s or a member of his/her household has a financial interest in the securities of this company. this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-securities services. As of 31 May 2011 HSBC beneficially owned 1% or more of a class of common equity securities of this company. volatility has to move 2. as detailed below.5 percentage points past the 40% benchmark in either direction for a stock's status to change. is a Market Maker in securities issued by this company. As of 31 May 2011. HSBC is a non-US Market Maker in securities issued by this company and/or in securities in respect of this company 21 . In order to avoid misleadingly frequent changes in rating. As of 31 May 2011. the distribution of all ratings published is as follows: Overweight (Buy) 52% (24% of these provided with Investment Banking Services) Neutral (Hold) Underweight (Sell) 36% 12% (19% of these provided with Investment Banking Services) (19% of these provided with Investment Banking Services) Share price and rating changes for long-term investment opportunities Coal India Limited (COAL. director or supervisory board member of this company.Coal India (COAL) Metals & Mining 8 July 2011 abc stocks which we do not consider volatile may in fact also behave in such a way. HSBC Securities (USA) Inc.

* HSBC Legal Entities are listed in the Disclaimer below.com/research. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business.Coal India (COAL) Metals & Mining 8 July 2011 abc Analysts. For disclosures in respect of any company mentioned in this report. please see the most recently published report on that company available at www. Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. 22 . and strategists are paid in part by reference to the profitability of HSBC which includes investment banking revenues. unless otherwise indicated in the report. economists. All market data included in this report are dated as at close 06 July 2011.hsbcnet. Additional disclosures 1 2 3 This report is dated as at 08 July 2011.

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