COAL India - Company Report - Enam Direct - 29042011

8/6/2019 COAL India - Company Report - Enam Direct - 29042011

1/31

1NAM Securities Direct 1

Financial Summary

Source: *Cons. broker estimates, Company, ENAM estimates, Note: ENAM estimates are IFRS compliant for FY12 and FY13.Source: ENAM Research, Bloomberg

Relative Performance

Stock DataNo. of shares : 6,31.6 cr

Market cap : Rs 2,348 bn

52 week high/low : Rs 376/ Rs 245

Avg. daily vol. (1mth) : 3.71 mn shares

Bloomberg code : COAL IB

Reuters code : COAL.BO

80

90

100

110

Nov-10 Dec-10 Feb-11 Apr-11

Sensex Coal India

Indias must-own resource company,Growth may be back-ended

Profit to become 5x in 7 yearsShareholding (%) Mar-11 QoQ chgPromoters : 90.0 0.0

FIIs : 6.1 0.6

MFs / UTI : 1.2 0.2

Banks / FIs : 0.5 (0.1)Others : 2.2 (0.6)

Y/EMarch

Sales(R s bn)

PAT(Rs bn)

Cons.EPS* (Rs.)

EPS(Rs.)

Change(YoY %)

P/ E(x)

Core RoE(%)

Core RoCE(%)

EV/EBITDA(x)

DPS(Rs)

FY10 447 97 - 15.3 31.3 - 41 55 - 4.7

FY11E 499 111 22.0 17.5 14.5 21.2 36 49 13.2 6.1

FY12E 606 167 25.3 26.5 51.0 14.0 37 52 8.5 9.3

FY13E 667 183 30.1 28.9 9.1 12.9 30 42 7.6 10.1

Coal IndiaCMP: Rs 376

Target Price: Rs 456Potential Upside: 21%

Absolute Rating: Buy


2/31

2NAM Securities Direct

Table of contents

Slide No. Executive Summary 3 Valuation: CIL and comparatives 5 Higher volume growth on environmental clearances 10 Availability of wagons to improve 11 Coal pricing upside intact 12

CIL: Financials 14 Annexure 17


3/31


0

5,000

10,000

15,000

20,000

25,000

30,000

FY05 FY06 FY07 FY08 FY09 FY10 FY11E FY12E

(Nos)

Executive Summary

Higher sales volume on increased wagon supplies FY11 dispatches were impacted by low wagon availability,

which had also led to flat production

(431 mnt) due to rising inventory

Legal hurdle had prevented Indian Railways to issue wagon

orders in FY10. However, post resolution of this legal issue,Indian Railways placed orders for 18,000 wagons in Sept

2010

Further, wagon suppliers expect orders for atleast 25,000 in FY12

Volume growth to accelerate on environmentalclearances Recent decision by the MoEF to lift moratorium on

expansion in the Angul-Talcher area to expedite expansion

projects, which are currently under implementation (total of

80 mn tonnes).

Further, rising coal shortage has forced PM to ensure faster

environment and forest clearances, which should augur

well for long- term volume growth. In the long-term, CIL has

plans to add another ~195 mnt of capacity based onprojects, which are under approval/formulation stage.

Higher wagon supplies => higher volume growth

Source: Company, ENAM Research

Legal issue which prevented new

orders in FY10 has been solved

zero

Volume growth potential better on MoEF/PM initiatives

431

80

195

706

0

200

400

600

800

FY11 Under

implementation

In approval/

formulationstage

Potential cap by

FY18

(mnt)


4/314NAM Securities Direct

Executive Summary

Coal pricing upside in short and long-term Despite the price hike, CILs prices continue to be

at a discount of 35-66% to international prices.CIL can raise prices for non power segment (15%of volume), which gets coal at 56% discount

Long-term: Coal prices for power users to rise asproportion of washed coal volumes will increase

to 40% by FY18 from 4% in FY10. Washed coal

is currently being priced at import parity .

Reiterate BUY with a 1-year target price ofRs 456 (vs. Rs 412 earlier) based on DCF. We raise our target price due to a lower WACC of

12.7% (vs. 14% earlier) on account of lowering

Beta to 0.9 (vs. 1.3 earlier).

CILs prices continue to be at a discount

1,0261,229

1,407 1,533

2,305

0

1,000

2,000

3,000

4,000

5,000

6,000

FY09 FY11 FY12 FY14 FY18

(Rs/ tonne)

Intl price *

Washed

E-auction

Regulated

Blended


* Richards Bay 6000 kc Steam Coal Spot Price/South Africa FOB.

Price estimates for FY12 and FY14 are based on Bloomberg

consensus estimates, while that for FY18 is based on FY15

Bloomberg consensus estimate + increase of 2% each year.



Valuation: CIL and comparatives



CIL: DCF valuation

Source: ENAM Research

L o n g - t e r m as sump t i o ns F Y 1 9 + Expected Mkt. Return 13.0%USD INR Market risk premium 4.9%

Volume (bn t) 1% Risk free bond yield 8.1%

Blended realization (Rs/t) 1.0% Beta 0.9

Average cost (Rs/ t) 3.0% Cost of Equity (%) 13%

Coal researves as per JORC (bn tonnes) 18 W A C C 1 2 . 7 %F Y 0 9 F Y 1 0 F Y 1 1 F Y 1 2 F Y 1 3 F Y 1 4 F Y 1 5 F Y 1 6 F Y 1 7 F Y 1 8 F Y 3 9

Volume (mn tonnes) 401 415 428 450 475 501 528 557 588 620 123

Realization (Rs/ ton) 1,026 1,142 1,229 1,407 1,464 1,533 1,719 1,881 2,068 2,305 2,840

Revenue (Rs bn) 412 474 526 633 695 768 908 1,049 1,216 1,430 349

Cost (Rs/ tonne) 772 830 882 900 940 983 1,031 1,074 1,118 1,174 2,184

EBITDA (Rs/ tonne) 253 311 347 507 524 550 688 807 950 1,131 656

EBITDA (Rs bn) 102 129 148 228 249 276 363 450 559 702 81

Depreciation (Rs bn) 17 13 16 15 17 22 25 28 30 32 33

PBT (Rs bn) 85 116 133 213 231 254 339 422 529 669 48Tax 29 39 41 66 72 84 115 144 180 228 16

PAT (Rs bn) 56 77 92 147 160 170 223 279 349 442 32

F r e e c a sh f l o w s t a t e me nt F Y 0 9 F Y 1 0 F Y 1 1 F Y 1 2 F Y 1 3 F Y 1 4 F Y 1 5 F Y 1 6 F Y 1 7 F Y 1 8 F Y 3 9PAT (excluding treasury income) 56 77 92 147 160 170 223 279 349 442 32

Add: Depreciation 17 13 16 15 17 22 25 28 30 32 33

Less: Capex 19 20 25 25 60 60 50 50 40 40 20

Less: Inc in working capital (91) (37) 44 21 26 8 23 24 (9) (8) (243)

FCFF (Rs bn) 145 107 39 116 91 124 176 233 347 442 288

WACC 1 2 . 7 %Discounted FCFF (Rs bn) 116 81 98 123 144 191 216 11

E V ( R s b n ) 2 , 4 5 0FY12E net cash (Rs bn) 430

Equity value (Rs bn) 2,880

E qu i t y v a l ue ( U S D b n ) 6 5No. of shares (bn shares) FV Rs 10 6.32

D C F Tar g e t p r i c e / shar e ( R s ) 4 5 6



C o mpany name C H IN A S H E N H U A - H C H IN A C O A L EN E - H Y A N Z H O U C O A L - H P EA B O D Y EN ER G Y C O N S O L EN ER G Y C O A L IN D IA L TDP r i c e ( U S D ) 5 1 . 3 3 . 9 6 5 . 0 5 1 . 0 8 . 3M c ap ( U S D m) 8 9 , 6 2 4 2 0 , 2 8 8 2 3 , 2 7 2 1 7 , 5 7 3 1 1 , 5 3 6 5 2 , 5 8 1EV ( U S D m) 9 2 , 6 1 7 1 9 , 9 2 5 2 5 , 3 8 3 1 8 , 9 4 0 1 4 , 9 8 9 4 3 , 8 3 2E B I TD A ( U S D m )

CY10 10,368 2,176 1,514 1,787 1,208 3,340

CY11e 12,583 2,752 2,617 2,471 1,760 5,134

CY12e 14,252 3,453 2,832 3,048 2,305 5,596

CY13e 15,567 3,911 2,934 3,009 2,501 6,201

P A T ( U S D m )CY10 5,635 1,103 1,371 774 347 2,493

CY11e 6,932 1,507 1,576 1,227 654 3,766

CY12e 7,900 1,810 1,707 1,646 1,011 4,108

CY13e 8,615 2,001 1,687 1,587 1,089 4,481

R O E ( x )CY10 20.7 10.5 27.9 18.4 14.7 35.9

CY11e 20.3 12.2 24.8 24.6 17.9 37.2

CY12e 20.2 13.8 22.9 24.5 24.3 29.7

CY13e 19.3 13.6 20.6 18.7 24.2 27.0

P E ( x )CY10 16.6 16.1 14.1 22.6 31.7 21.1

CY11e 13.7 11.6 12.2 14.3 18.0 14.0

CY12e 11.9 9.6 11.3 10.9 11.6 12.8

CY13e 10.9 8.8 11.5 11.4 10.9 11.7

P B ( x )CY10 3.1 1.6 3.4 3.8 3.9 6.8

CY11e 2.6 1.4 2.9 3.0 3.1 4.2

CY12e 2.3 1.3 2.5 2.4 2.5 3.5

CY13e 2.0 1.2 2.2 2.0 2.1 2.9

E V / E b i t d a ( x )CY10 8.9 9.2 16.8 10.6 12.4 13.1

CY11e 7.4 7.2 9.7 7.7 8.5 8.3

CY12e 6.5 5.8 9.0 6.2 6.5 7.4

CY13e 5.9 5.1 8.7 6.3 6.0 7.1

Coal reserves (mnt) 7,000 5,000 2,000 9,000 4500 18,000 (JORC)

EV/tonne of reserve ($) 13.2 4.0 12.7 2.1 3.3 2.4

Coal production (mnt) 210 101 38 244 58 431

Peer valuation

Source: Bloomberg, ENAM estimates



CIL: Outlook


9/31


Massive coal shortage of 160 mn tonnes (~30%)

India expects FY12E domestic coal demand at 713 mnt, while production at 553 mnt implying a shortage of160 mnt (to be met by way of imports), vs. a shortage of 82 mnt in FY11.

Beyond FY12, Coal imports are likely to remain high given large power capacity additions (115 GW in next 4 years)

We expect CIL to be an indirect beneficiary from this due to a) added pressure on the Government to soften its stance onenvironmental concerns, thus facilitating CILs expansion plans, and b) E-auction pricing would continue to remain high.

33

4756

50

82

160

0

40

80

120

160

200

FY07 FY08 FY09 FY10 FY11E FY12E

(mnt)

Domestic coal imports

Source: Ministry of Coal

Domestic coal demand

A massive shortage of Coal has forced the Govt of India to ensure faster clearance of coal projects

(mn tonnes) Xth PlanSector 2006-07 2007-08 2008-09 2009-10 2010-11E 2011-12EI) Coking Coal- Steel/Coke Ovens & Cokeries 17 17 17 16 17 26

- Steel (Import) 18 22 21 23 23 42Sub-Total Coking 35 39 38 39 40 69II) Non-Coking Coal- Power Utilites(Gen.Req.) 308 332 363 380 405 473

- Captive Power 28 29 34 38 40 47

- Cement 20 21 19 21 26 33

- Steel DR 17 21 20 23 29 29

- BRK & others 56 61 77 89 85 62Sub-Total Non-Coking 429 465 511 543 585 645Grand Total ( I+II) 464 504 549 582 625 713Domestic Production 431 457 493 532 543 553Shortfal l (met by imports) 33 47 56 50 82 160

XI Plan


10/31


Faster environmental clearances to aid volume growth

Recently, the MoEF lifted the moratorium onexpansions (based on the Comprehensive

Environmental Pollution Index (CEPI) ) in 20 areas

which includes the Angul-Talcher area (Orissa). Thiswill expedite expansion projects which are currentlyunder implementation (total of 80 mn tonnes).

In March, the Coal ministry had said that it has

received environment clearance in writing for Coal

India's 14 projects, which were held up for the last

six months - one year

PMs direct involvement to ensure environment and

forest clearances augurs well for CILs long-term

volume growth

Potential to add ~275 mnt of capacity based on the

projects under implementation currently as well asthose in approval/formulation stage. (refer annex 5)

We expect volumes to grow at 5.5% every year from

FY13E onwards with a capacity of 620 mnt by FY18

FY12 output growth expected at 7%, as logistics improve

431

80

195

706

0

200

400

600

800

FY11 Under

implementation

In approval/

formulation

stage

Potential cap by

FY18

(mnt)

CILs capacity addition potential



11/31


Logistics to improve on availability of wagons

Dispatches were impacted in FY11 due to low availability ofwagons. This in turn had also led to flat production(at 431 mnt) due to rising inventory

In FY10, Indian Railways had delayed issuing wagon ordersdue to legal issues (annex 2), which has now been resolved

Wagon availability to improve going forward a positive forCIL as more than 55% of the coal is transported by rail In September 2010, Indian Railways issued orders for 18,000

wagons. In addition to the pending orders, new orders of 18,000

wagons should come through

Wagon industry expects at least 25,000 wagon orders in FY12

Others

4.0%

Merry-go-round

23.0%

Railways

56.0%

Road

17.0%

Source: ENAM Research, Ministry of coal

Mode of coal transportation in India (Fiscal 2010)

Annual wagon orders

Wagon supplies to increase going forward a positive for CILs volume growth

00

5,000

10,000

15,000

20,000

25,000

30,000

FY05 FY06 FY07 FY08 FY09 FY10 FY11E FY12E

(Nos)Legal issue which prevented new

orders in FY10 has been solved

379404

431 431450

475501

528

557

588

620

300

400

500

600

700

FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17FY18

(mnt)Wagon availability, w hich

had impacted production

to improve going forw ard

CILs production was FLAT in FY11

zero


12/31


0

200

400

600

800

1,000

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

(Rs/mKcal)

Coal pricing upside intact

For non-power consumers: Despite the price hike,CILs prices continue to be at a discount of 56% to

international prices which reflects CILs potential to

further increase prices

Rising e-auction prices: E-auction pricing wouldcontinue to remain high on continuing coal shortage

in India

Rising washed coal volume: In the long-term, highvalue washed coal volumes will increase to 40% by

FY18 from 4% in FY10. Washed coal is currently

being priced at import parity

CIL has a huge upside if global coal pricesrise/remain at current levels and no downside ifglobal prices fall


Coal price upside intact

Post pric e hike Propn (Rs/ton)

(USD/ton)

Intl price *USD/ ton

Discount(%)

E-auction 10% 1,950 43 67 (35.3)

Linkage/FSA - Non

power

15% 1,330 30 67 (55.9)

Linkage/FSA - Power 75% 1,020 23 67 (66.2)

RealisationPricing discount post recent price hike

We believe, the recent price hike demonstrates CILs power and willingness to align its pricing to marketdriven pricing, especially for the non-power segment

South African Coal6,200 Kcal

Indonesian Coal

5,200 Kcal

CIL Coal

4,502 Kcal

Source: Company, ENAM Research,

* Indonesian Coal reference price (Average 4400 Kcal) - FOB


13/31


Long-term coal pricing growth

1,0261,229 1,407

1,533

2,305

0

1,000

2,000

3,000

4,000

5,000

6,000

FY09 FY11 FY12 FY14 FY18

(Rs/ tonne)

Blended realization to double

4 4

40

11 12

12

85 84

48

0%

20%

40%

60%

80%

100%

FY10 FY14 FY18

Washed E-auction Raw Coal

Increase in Washed coal sales

Source: Company, ENAM Research, Bloomberg

* Richards Bay 6000 kc Steam Coal Spot Price/South Africa FOB. Price estimates for FY12 and FY14 are based on Bloomberg

consensus estimates, while that for FY18 is based on FY15 Bloomberg consensus estimate + increase of 2% each year.

We expect blended realizations to almost double by FY18E as CIL increases its washed coalvolumes to 40% by FY18E from 4% in FY10

Intl price *

Washed

E-auction

Regulated

Blended


14/31


CIL : Financials


15/31


Company Financials

Source: Company, ENAM Research, Note: ENAM estimates are IFRS compliant for FY12 and FY13

Pro f i t & Loss (Rs mn)Y / E M ar c h F Y 1 0 F Y 1 1 E F Y 1 2 E F Y 1 3 EN e t sa l e s 4 4 7 , 1 2 2 4 9 8 , 6 9 7 6 0 5 , 6 7 5 6 6 6 , 6 8 3Other operating income 26,610 27,142 27,685 28,238

To t a l inc o me 4 7 3 , 7 3 2 5 2 5 , 8 3 9 6 3 3 , 3 5 9 6 9 4 , 9 2 2

Cost of goods sold 323,061 360,200 386,349 423,902

Contribution (%) 34 33 41 41

Advt/Sales/Distrn O/H 21,429 17,213 18,829 22,287

O pe r at ing P r o f i t 1 2 9 , 2 4 2 1 4 8 , 4 2 6 2 2 8 , 1 8 1 2 4 8 , 7 3 2Other income 25,799 29,299 30,987 34,198

P B ID T 1 5 5 , 0 4 0 1 7 7 , 7 2 5 2 5 9 , 1 6 9 2 8 2 , 9 3 1Depreciation 13,295 15,606 15,462 17,496

Interest 1,560 1,518 1,158 798

Other pretax 0 0 0 0

P r e - t ax p r o f i t 1 4 0 , 1 8 6 1 6 0 , 6 0 2 2 4 2 , 5 4 8 2 6 4 , 6 3 7Tax provision 43,425 49,786 75,190 82,037

(-) Minority Interests 0 0 0 0

Associates 0 0 0 0A dj ust e d P A T 9 6 , 7 6 1 1 1 0 , 8 1 5 1 6 7 , 3 5 8 1 8 2 , 5 9 9E/o income / (Expense) (537) 0 101,174 0

R epo r t ed P A T 9 6 , 2 2 4 1 1 0 , 8 1 5 2 6 8 , 5 3 2 1 8 2 , 5 9 9

Key ra t ios (%)Y / E M ar c h F Y 1 0 F Y 1 1 E F Y 1 2 E F Y 1 3 ES al es g r o w t h 1 5 . 2 1 1 . 5 2 1 . 5 1 0 . 1

O P M 2 8 . 9 2 9 . 8 3 7 . 7 3 7 . 3Oper. profit growth 27.0 14.8 53.7 9.0

COGS / Net sales 68.2 68.5 61.0 61.0

Overheads/Net sales 4.5 3.3 3.0 3.2

Depreciation / G. block 3.8 4.2 4.0 4.2

Effective interest rate 7.4 8.0 7.8 7.3

Net wkg.cap / Net sales (0.5) (0.5) (0.2) (0.0)

Net sales / Gr block (x) 1.3 1.4 1.6 1.7

R o C E 5 5 4 9 5 2 4 2Debt / equity (x) 0.1 0.0 0.0 0.0

Effective tax rate 31.0 31.0 31.0 31.0

R o E 4 1 3 6 3 7 3 0Payout ratio (Div/NP) 31.0 35.0 21.8 35.0

EP S ( R s . ) 1 5 . 3 1 7 . 5 2 6 . 5 2 8 . 9EPS Growth 31.3 14.5 51.0 9.1

CEPS (Rs.) 17.4 20.0 28.9 31.7

DPS (Rs.) 4.7 6.1 9.3 10.1


16/31


Company Financials

Source: Company, ENAM Research, Note: ENAM estimates are IFRS compliant for FY12 and FY13

Balance sheet (Rs. mn)Y/E March FY10 FY11E FY12E FY13ETotal assets 284,210 352,240 558,197 672,886Gross block 350,651 371,560 386,560 416,560

Net fixed assets 121,553 126,856 126,393 138,898

CWIP 20,909 25,000 35,000 65,000

Investments 12,821 12,821 12,821 12,821

Wkg. cap. (excl cash) (261,850) (218,179) (45,873) (19,559)

Cash / Bank balance 390,778 405,742 429,855 475,726

Others/Def tax assets 0 0 0 0

Capital employed 284,210 352,240 558,197 672,886Equity capital 63,164 63,164 63,164 63,164

Reserves 209,799 281,829 491,785 610,475

Borrowings 20,869 16,869 12,869 8,869

Others (9,621) (9,621) (9,621) (9,621)

Cash flow (Rs. mn)Y/E March FY10 FY11E FY12E FY13ESources 79,031 8 3,635 221,419 132,185Cash profit 110,056 126,421 182,821 200,095

(-) Dividends 29,871 38,785 58,575 63,910

Retained earnings 80,185 87,635 124,245 136,185

Issue of equity 0 0 0 0

Borrowings (616) (4,000) (4,000) (4,000)

Others (537) 0 101,174 0

Applications 79,031 83,635 221,419 132,185Capital expenditure 19,804 25,000 25,000 60,000

Investments (2,230) 0 0 0

Net current assets (36,566) 43,671 172,306 26,314

Change in cash 98,024 14,964 24,113 45,871


17/31


Annexure


18/31


CIL: Long-term projections (Income statement)

Source: Company, ENAM Research, Note: ENAM estimates for FY12 onwards are IFRS compliant.

Profit and Loss statement

355,593284,609230,410187,513151,530136,185124,24587,63579,648Retained cash

323,560255,097202,738162,693129,461118,690108,78372,03066,353Retained profit

174,224137,360109,16787,60469,71063,91058,57538,78529,871Less : Dividends

497,78492,45711,90550,29699,17182,59968,53210,8156,224eported PAT101,174-537Add : Extraordinary Income(Expenses)

497,78492,45711,90550,29699,17182,59967,35810,8156,761djust ed PAT256,434202,175160,678128,94193,72882,03775,19049,78643,425TAX

754,21994,63272,58379,23792,89964,63742,54860,60240,186BT32,03329,51227,67224,82022,06917,49615,46215,60613,295Depreciation and other non-cash charges

786,252624,144500,255404,057314,967282,132258,010176,207153,481PBDT

00004387981,1581,5181,560INTEREST

786,252624,144500,255404,057315,406282,931259,169177,725155,040PBIDT

84,73365,29850,10540,71139,79434,19830,98729,29925,799Add : Non Operational Income (Losses)

701,51958,84650,15063,34675,61148,73228,18148,42629,242PBIDT728,51857,30798,69444,93892,43846,19005,17877,41344,490OTAL COSTS (A +B )

1,430,037,216,153,048,84408,28468,04994,92233,35925,83973,732OTAL INCOME (NET SALES + OI )31,17830,56629,96729,37928,80328,23827,68527,14226,610Add : Other Operating Income

1,398,8591,185,5871,018,877878,905739,246666,683605,675498,697447,122NET REVENUE

643677713750790831875921969Coal issued for other purposes

1,398,216,184,910,018,16578,15538,45665,85204,80097,77646,153ET SALESFY 18EY 17EY 16EY 15EY 14EY 13EY 12EY 11EY 10Rs mn )


19/31


CIL: Long-term projections (Balance sheet)


Balance Sheet(Rs mn) FY10 FY11E FY12E FY 13E FY14E FY15E FY16E FY17E FY 18ECAP ITAL EMPLOYED 284, 210 352,240 558,197 672, 886 798,348 956,171 1,158, 909 1,414, 006 1, 737,566NET WORTH 272, 726 344,756 554,713 673, 403 802,864 965,557 1,168, 295 1,423, 392 1, 746,952Equity Capital 63,164 63,164 63,164 63,164 63,164 63,164 63,164 63,164 63,164

Reserves & PL a/c 209,563 281,593 491,549 610,239 739,700 902,393 1,105,131 1,360,228 1,683,788

No of shares in mn outstanding (ful ly di lu 6, 316 6,316 6,316 6, 316 6, 316 6,316 6,316 6,316 6, 316BORROWING 20, 869 16,869 12,869 8, 869 4, 869 0 0 0 0Deffered Tax (9,621) (9,621) (9,621) (9,621) (9,621) (9,621) (9,621) (9,621) (9,621)

Minor i ty Interest 236 236 236 236 236 236 236 236 236ASSETS 284,210 352,240 558,197 672,887 798,348 956, 171 1,158, 909 1, 414, 006 1, 737, 567GROSS BLOCK 350, 651 371,560 386,560 416, 560 501,560 551,560 601, 559 641, 558 681,557

Less : Accumulated Depreciation 229,099 244,704 260,167 277,662 299,731 324,551 352,223 381,734 413,767

NET BLOCK 121, 553 126,856 126,393 138, 898 201,829 227,009 249, 336 259, 824 267,790C WIP 20,909 25,000 35,000 65,000 40,000 40,000 40,001 40,002 40,003

INVESTMENTS 12, 821 12,821 12,821 12, 821 12, 821 12,821 12,821 12, 821 12,821- Others 12,821 12,821 12,821 12,821 12,821 12,821 12,821 12,821 12,821

WORKING CAPITAL GAP 128, 927 187,563 383,982 456, 167 543,697 676,341 856, 751 1,101, 359 1, 416,952Current Assets 543,244 554,481 621,503 670,093 773,052 922,682 1,119,192 1,416,506 1,796,181

Inventory 44,018 39,474 42,340 46,455 51,344 64,389 70,862 77,967 86,390

Receivables 21,686 20,457 24,855 29,188 34,394 43,306 53,000 61,680 72,784

Cash and bank balances 390,778 405,742 429,855 475,726 555,668 665,694 822,260 1,075,472 1,399,393

Loans & Advances 86,762 88,809 124,454 118,724 131,647 149,293 173,070 201,387 237,614

Current Liabilities & Provisions 414,316 366,918 237,521 213,927 229,355 246,342 262,441 315,147 379,229


20/31


CIL: Long-term projections (Cash flow statement)

Cash flow statement(Rs mn) FY10 FY11E FY12E FY13E FY14E FY15E FY16E FY17E FY18EMonthsSOURCESOpening Cash 296,950 390,778 405,742 429,855 475,726 555,668 665,694 822,260 1,075,472

Retained Earnings 75,452 87,635 74,413 136,185 151,530 187,513 230,410 284,609 355,593

Borrowings (616) (4,000) (4,000) (4,000) (4,000) (4,869) 0 0 0

Total 371,785 474,413 476, 155 562,040 623,256 738, 311 896, 104 1, 106, 869 1, 431, 065APPLICATIONSCapital Expenditure 19,804 25,000 25,000 60,000 60,000 50,000 50,000 40,000 40,000

Investments (2,230) 0 0 0 0 0 0 0 0

Inc in WCap (36,566) 43,671 21,300 26,314 7,588 22,617 23,844 (8,603) (8,328)

Closing cash 390,778 405,742 429,855 475,726 555,668 665,694 822,260 1,075,472 1,399,393

Total 371, 785 474, 413 476, 155 562, 040 623, 256 738, 311 896,104 1,106,869 1,431,065

Coal production details(mn tonnes) FY10 FY11E FY12E FY13E FY14E FY15E FY16E FY17E FY18E

Offtake (mn tonnes) 415 428 450 475 501 528 557 588 620Total Product ion (mn tonnes) 431 431 450 475 501 528 557 588 620Blended real i z at ion (Rs/t ) 1,142 1,229 1,407 1, 464 1,533 1,719 1,881 2,068 2, 305% change 11.3 7.6 14.6 4.0 4.8 12.1 9.5 9.9 11.5

USD/t 24 28 34 36 38 43 49 53 59Blended ebi t da (Rs/t ) 311 347 507 524 550 688 807 950 1,131% change 23 11 46 3 5 25 17 18 19

USD/t 6. 6 7. 9 12.1 12.7 13.6 17.4 20. 8 24.5 29.2Blended cost (Rs/t ) 830 882 900 940 983 1,031 1,074 1, 118 1,174% change 7.5 6.2 2.1 4.4 4.6 4.9 4.1 4.1 5.1

USD/t 17. 5 20. 2 21.4 22.8 24.4 26.1 27. 7 28.8 30.3U SD/INR 47. 50 43.70 42.00 41.16 40.34 39.53 38.74 38.74 38.74


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CIL: Long-term projections (quantitative details)


Coal ( Rs bn) FY10 FY11E FY12E FY13E FY14E FY15E FY16E FY17E FY18ECost (Rs bn) 344.5 377.4 405.2 446.0 492.4 544.9 598.5 657.3 727.6

Employee Costs 167 178 205 219 235 249 264 280 296Stores, spares & tools, dies 49 55 65 74 85 97 111 126 144

Contracting, processing, machining & repair 46 50 58 68 77 88 97 108 120

Power & Fuel 17 19 23 26 30 34 39 45 51

OBR Adj./ Site restoration as per IFRS 31 31 5 5 5 6 6 6 7

Social Overhead 20 21 24 28 31 34 38 41 48

Misc Expenses 20 20 22 24 25 26 27 29 31

Royalties/ Washing cost 0 2 2 2 3 9 14 21 29

Inventory Adjustment -7 0 0 0 0 0 0 0 0

Carriage & Freight 1 1 1 1 1 1 1 1 2

TOTAL (Rs bn) 344 377 405 446 492 545 598 657 728

A 1 E i l l


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Annexure 1: Environmental clearances

Recently, the MoEF lifted the moratorium on expansions (based on the Comprehensive EnvironmentalPollution Index (CEPI) ) in 20 areas which includes the Angul-Talcher area (Orissa).

In March, the Coal ministry had said that it has received environment clearance in writing for Coal

India's 14 projects, which were held up for the last six months to one year.


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A 3 R t i hik


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Annexure 3: Recent price hike


CoalGrade PriceHike Consumingsegment Remarks

A-B grade 100% Primarily consumed

by non-power

Prices are on the basis of last six month 6500 GCV

Indonesian coal. Will be reset every year

C-G grade 30% All Price hike only for Non-power/ Fertilizers meaning cement,sponge, captive power

MCL Coal (All grades) 16-25% All Price hike for all consumers including power producers

A 4 P i i f i d f l


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Annexure 4: Price increases for various grades of coal


Non-coking Coal Price Range (Rs. per ton)Before revision After revisionPower, fertilizer and

defence consumer OthersA Rs.1,280 to Rs.2,580 Rs.3,690 to Rs.4,100 Rs.3,690 to Rs.4,100

B Rs,1,130 to Rs.2,120 Rs.3,590 to Rs.3,990 Rs.3,590 to Rs.3,990

C Rs.950 to Rs.1,860 Rs.1,050 to Rs.1,860 Rs.1,370 to Rs.2,420

D Rs.790 to Rs.1610 Rs.880 to Rs.1,610 Rs.1,140 to Rs.2,090

E Rs.620 to Rs.1,090 Rs.730 to Rs.1,090 Rs.950 to Rs.1,420

F Rs.480 to Rs.860 Rs.570 to Rs.870 Rs.740 to Rs.1,130

G Rs.350 to Rs.650 Rs.430 to Rs.700 Rs.560 to Rs.910

Coking CoalSteel Grade I Rs.3,750 Rs.3,750 Rs.4,880

Steel Grade II Rs.3,140 Rs.3,140 Rs.4,080

Washery Grade I Rs.1,710 to Rs.2,740 Rs.1,710 to Rs.2,740 Rs.2,220 to Rs.3,560

Washery Grade II Rs.1,410 to Rs.1,990 Rs.1,410 to Rs.1,990 Rs.1,830 to Rs.2,590

Washery Grade III Rs.1,200 to Rs.1,480 Rs.1,200 to Rs.1,480 Rs.1,560 to Rs.1,910

Washery Grade IV Rs.1,120 to Rs.1,370 Rs.1,120 to Rs.1,370 Rs.1,460 to Rs.1,780

Others ( SC-I/II/SLV) Rs.1,450 to Rs.2,150 Rs.1,450 to Rs.2,150 Rs.1,890 to Rs.2,800

Annexure 5: CILs long term expansion plan


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Annexure 5: CILs long term expansion plan

Excerpts from Outcome budget 2011-12 - Ministry of Coal Coal India Limited has taken the following steps to increase indigenous

production:- 142 coal projects have been identified by Coal India Limited (CIL) to be taken up

during XI Plan period. Out of these 142 coal projects, 77 projects with an

ultimate capacity 184.78 Mty have already been approved and are under

various stages of implementation. Rest 65 projects, with an ultimate capacity of

195.44 Mty are under various stages of approval/formulation.

Introduction of mass production technology with Continuous miners & shuttle

car combination, SDL/LHD with high speed mechanized drilling etc where geo-

mining conditions permits.

Some of underground coalmines / blocks have been identified for development,

construction and operation at high capacity with stale-of-the art technology.

Up gradation to high capacity equipment matching with bench height and

stripping ratio.

Enhancement of Railway infrastructure facilities at different subsidiaries is in

progress.

Improvement in equipment utilization.

Timely implementation of projects.

All new mines being planned with mechanization.

Increasing productivity in both underground and opencast mines.Source: - Ministry of Coal

Out of 184 mnt, 104 mnt has

already been implemented as

of FY10. Remaining 80 mnt is

currently under implementation

Out of 184 mnt, 104 mnt has

already been implemented as

of FY10. Remaining 80 mnt is

currently under implementation

Annexure 6: Grade wise volume dispatch (thermal coal)


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Annexure 6: Grade-wise volume dispatch (thermal coal)

Fiscal2007 2008 2009 2010

Raw CoalDispatch

(mn tons)% of TotalRaw CoalDispatch

Raw CoalDispatch


Raw CoalDispatch


Raw CoalDispatch


Non-coking CoalA 4.82 1.4% 4.65 1.2% 4.02 1.0% 4.24 1.0%

B 23.09 6.6% 24.07 6.4% 25.03 6.3% 25.61 6.2%

C 39.29 11.2% 37.59 10.0% 35.11 8.8% 38.93 9.4%

D 30.16 8.6% 34.05 9.1% 36.26 9.1% 30.88 7.4%

E 84.15 24.0% 91.84 24.5% 103.61 25.9% 105.74 25.5%

F 144.69 41.3% 157.10 41.9% 169.06 42.2% 175.68 42.3%

G 0.00 0.0% 0.02 0.03% 0.15 0.03% 0.01 0.0%

Total Non-coking Coal 326.20 93.1% 349.32 93.3% 373.24 93.1% 381.09 91.8%Source: ENAM Research


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Annexure 7: Grade-wise volume dispatch (coking coal)

1.Includes NEC (Assam grade) coal. 2) Less than 0.01 million tons. 3) Less than 0.1%. 4) Includes semi-coking coal and weakly coking coal

Fiscal2007 2008 2009 2010Raw CoalDispatch


Raw CoalDispatch


Raw CoalDispatch


Raw CoalDispatch


Coking Coal4- Steel Grade I 0.13 0.03% 0.09 0.03% 0.06 0.03% 0.09 0.03%

- Steel Grade II 0.51 0.2% 0.28 0.1% 0.87 0.2% 1.06 0.3%

- Washery Grade I 0.28 0.1% 0.46 0.1% 0.31 0.1% 0.29 0.1%

- Washery Grade II 2.12 0.6% 2.00 0.5% 1.65 0.4% 1.48 0.4%

- Washery Grade III 6.17 1.8% 5.64 1.5% 6.62 1.7% 7.07 1.7%

- Washery Grade IV 14.62 4.2% 16.40 4.4% 17.78 4.4% 23.98 5.8%

- Others( SC-I/II/SLV) 0.27 0.1% 0.38 0.1% 0.22 0.1% 0.16 0.03%

Total Coking Coal 24.10 6.8% 25.25 6.6% 27.51 6.8% 34.13 8.2%Total Raw Coal 350.30 100.0% 374.57 100.0% 400.75 100.0% 415.22 100.0%



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