Coal India Limited - Product Note

8/8/2019 Coal India Limited - Product Note

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JM Financial Services Pvt Ltd Please see additional important disclosure at the end of this report Private & Confidential

.

IPO Details

Objects of the OfferThe objects of the Offer are to carry out the divestment of 631,636,440 Equity Shares by the SellingShareholder and to achieve the benefits of listing the Equity Shares on the Stock Exchanges. The Company

will not receive any proceeds from the Offer and all proceeds shall go to the Selling Shareholder.

The BusinessThey have been conferred the Navratna status by the GoI (provides them with certain operational andfinancial autonomy). They are the largest coal producing company in the world (Source: CRISIL

Research), based on their raw coal production of 431.26 million tons in fiscal 2010. They are also the

largest coal reserve holder in the world (Source: CRISIL Research) based on their reserve base as of April1, 2010. Coal produced by them accounted for approximately 81.9% of coal production in India in fiscal

2009 (Source: CRISIL Coal Outlook). They produce non-coking coal and coking coal of various grades fordiverse applications.

As of March 31, 2010, they operated 471 mines in 21 major coalfields across 8 states in India

(Chhattisgarh, West Bengal, Jharkhand, Maharashtra, Madhya Pradesh, Assam, Orissa and Uttar

Pradesh) including 163 open cast mines, 273 underground mines and 35 mixed mines (which include

both open cast and underground mines).

As of April 1, 2010 they had:

Resource Categories

Total Resources - 64,218.0 million tons

Measured Resources - 51,326.3 million tons

Indicated Resources - 9,924.4 million tons

Inferred Resources - 2,967.3 million tons

Reserve Categories

Total Reserves - 18,862.9 million tons

Proved Reserves - 10,595.1 million tons

Probable Reserves - 8,267.8 million tons

(Refer to Glossary at the end of the document for terms)

Pharmaceuticals Company UpdateIndia

XOXO

XOXO

Sun Pharma SUNP IB

09 December 2010COAL INDIA LIMITED

October 8th

, 2010 Product Note

Nandita Mehta nandita.mehta@jmfinancial.

The Offer Coal India LimitedSector Mining & Mineral Products

Transaction 100% Book Building

Offer Size 631,636,440 equity shares of Rs 10 each

10% of the fully diluted post offer paid-up capital

IPO Dates Oct 18th 2010 Oct 20th 2010 (for QIB)

Oct 18th 2010 Oct 21st 2010 (for Retail / HNI)

Price Band Rs (*) to Rs (*)

Bid Lot (*) equity shares and in multiples of (*)

IPO Grading CRISIL; ICRA & CARE 5/5 Strong Fundamentals

Exchanges BSE; NSE

BRLM

Citigroup Global Capital Markets India Private Limited; Deutsche Equities (India) Private

Limited; DSP Merrill Lynch Limited; Enam Securities Private Limited; Kotak Mahindra

Capital Company Limited; Morgan Stanley India Company Private Limited

Registrar Link Intime India Private Limited


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Coal India Limited October 8, 2010


Corporate StructureThe company has 9 direct Subsidiaries and 2 indirect Subsidiaries and one Foreign Subsidiary (Coal India

Africana Limitada).

Their Coal Reserves and Resources as of April 1, 2010 (as classified under the JORC code - 2004Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, as audited

by SRK - SRK Mining Services (India) Private Limited and SRK Consulting (UK) Limited.)

Central India Coalfields are comprised of the Jhilimili, Bisrampur, Lakhanpur, Sindurgarh, Umaria, Johilla,Sohagpur, Sonhat and Chirmiri coalfields.

Measured Indicated Inferred Total Proved Probable Total

(million tons)

Coalfields currently under production

Korba 3,473.70 108.60 990.00 4,572.30 2,006.30 387.10 2,393.40

Singrauli 3,283.60 196.10 - 3,479.70 1,877.80 12.80 1,890.60

Talcher 1 7,972.20 1,830.10 - 9,802.30 2,629.80 2,542.30 5,172.10

IB-Valley 2 3,615.40 198.10 - 3,813.50 1,243.90 1,157.90 2,401.80

Wardha Valley 1,849.90 942.80 58.60 2,851.30 247.00 435.90 682.90

Jharia 5,867.90 1,039.10 117.00 7,024.00 315.20 183.30 498.50

North Karanpura 4,502.00 76.30 - 4,578.30 420.50 1,605.00 2,025.50

Central India Coalfields 3 2,379.80 628.10 138.20 3,146.10 279.30 233.70 513.00

Raniganj 7,344.20 1,130.50 646.70 9,121.40 307.20 25.30 332.50

Rajmahal/Deogarh 4 1,247.90 1,031.00 952.00 3,230.90 455.70 90.00 545.70

East Bokaro 2,063.30 1,150.80 - 3,214.10 84.40 464.60 549.00

West Bokaro 1,483.20 264.00 11.80 1,759.00 309.00 98.80 407.80

Kamptee 755.10 180.90 - 936.00 106.70 39.80 146.50

Mand-Raigarh 1,912.70 156.20 - 2,068.90 37.10 617.30 654.40

Umrer Nand Bander 557.80 0.70 - 558.50 36.80 172.60 209.40

South Karanpura 1,445.00 212.20 6.50 1,663.70 130.20 57.00 187.20

Pench-Kanhan 673.20 201.20 36.00 910.40 8.50 44.30 52.80

Pathakhera 188.20 29.70 - 217.90 28.10 48.50 76.60

Makum 308.40 14.80 10.50 333.70 49.50 1.00 50.50

Ramgarh 382.80 22.00 - 404.80 7.50 50.70 58.20Giridih - 17.50 - 17.50 14.60 - 14.60

Daltonganj 15.70 0.20 - 15.90 - - -

Hutar - - - - - - -

Tatapani-Ramkola - 478.80 - 478.80 - - -

Dilli-Jeypore 4.20 14.70 - 18.90 - - -

Total 51,326.30 9,924.40 2,967.30 64,218.00 10,595.10 8,267.80 18,862.90

Coalfields currently not under production

ResourceCoalfield

Reserve


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Information relating to their coalfields (they operate and are currently under production):

UG: underground mines; OC: open cast mines; M: mixed mines (includes both open cast and underground mines);T:Total as on April 1, 2010.

Production by Coalfield

Fiscal

2006 2007 2008 2009 2010Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Korba 58.24 17.0% 62.72 17.4% 67.42 17.8% 73.35 18.2% 78.46 18.2% 17.99 18.9%

Singrauli 51.52 15.0% 52.16 14.5% 59.62 15.7% 63.65 15.8% 67.67 15.7% 14.81 15.6%

Talcher 45.47 13.2% 50.58 14.0% 53.65 14.1% 57.53 14.3% 59.74 13.9% 11.47 12.1%

Ib Valley 24.13 7.0% 29.42 8.2% 34.35 9.1% 38.80 9.6% 44.34 10.3% 10.43 11.0%

Wardha Valley 28.03 8.2% 27.70 7.7% 27.79 7.3% 28.90 7.2% 29.32 6.8% 7.58 8.0%

Jharia 22.05 6.4% 22.84 6.3% 23.62 6.2% 24.14 6.0% 27.45 6.4% 6.96 7.3%

North Karanpura 20.79 6.1% 21.15 5.9% 22.17 5.8% 21.95 5.4% 23.56 5.5% 4.01 4.2%

Central India Coal fi elds * 23 .63 6.9% 23.35 6.5% 23.40 6.2% 23.35 5.8% 24.72 5.7% 5.99 6.3%

Raniganj 19.64 5.7% 19.27 5.3% 17.34 4.5% 17.57 4.4% 17.02 4.0% 3.45 3.6%

Rajmahal/ Deogarh 12.73 3.7% 12.56 3.5% 8.32 2.2% 11.94 3.0% 13.10 3.0% 2.86 3.0%

East Bokaro 8.80 2.6% 8.78 2.4% 9.98 2.6% 9.91 2.5% 12.70 3.1% 2.34 2.5%

West Bokaro 5.43 1.6% 5.31 1.5% 5.60 1.5% 4.91 1.2% 5.16 1.2% 0.86 0.9%Kamptee 4.41 1.3% 4.31 1.2% 4.36 1.2% 4.26 1.1% 5.03 1.2% 1.19 1.3%

Mand Raigarh 1.16 0.3% 2.43 0.7% 2.97 0.8% 4.45 1.1% 4.83 1.1% 1.35 1.4%

Umrer Nand Bander 3.68 1.1% 4.21 1.2% 4.26 1.1% 4.50 1.1% 4.27 1.0% 0.95 1.0%

South Karanpura 4.47 1.3% 4.97 1.4% 4.94 1.3% 4.84 1.2% 3.98 0.9% 0.81 0.9%

Pench-Kanhan 3.82 1.1% 3.69 1.0% 3.88 1.0% 3.78 0.9% 3.86 0.9% 0.96 1.0%

Pathakhera 3.27 1.0% 3.31 0.9% 3.23 0.9% 3.26 0.8% 3.26 0.8% 0.74 0.8%

Makum 1.10 0.3% 1.05 0.3% 1.10 0.3% 1.01 0.3% 1.11 0.3% 0.16 0.2%

Ramgarh 0.72 0.2% 0.72 0.2% 0.85 0.2% 1.00 0.3% 1.10 0.3% 0.15 0.2%

Giridh 0.30 0.1% 0.38 0.1% 0.61 0.2% 0.63 0.2% 0.58 0.0% 0.12 0.1%

Total 343.39 100.0% 360.91 100.0% 379.46 100.0% 403.73 100.0% 431.26 100.0% 95.15 100.0%

3 months ended Jun

30th 2010Coalfield

CoalfieldOperating

Subsidiary / DivisionLocation (District/State) UG OC M T

Grades of

Coal

Korba SECL Korba/ Chattisgarh 10.00 5.00 - 15.00 B, C, E, F 75.22

Singrauli NCL

Singrauli and Sonebhadra/

Madhya Pradesh and Uttar

Pradesh

- 10.00 - 10.00 C, D, E 77.36

Talcher MCL Angul/Orissa 4.00 9.00 - 13.00 B, C, E, F 69.30

Ib Valley MCLJharsugudah and

Sundargarh/Orissa5.00 7.00 - 12.00 C, D, E, F 45.30

Wardha Valley WCLChandrapur and Yeotmal/

Maharashtra12.00 26.00 - 38.00 B, C, D, E 29.23

Jharia BCCL Dhanbad, Bokaro/ Jharkhand 38.00 17.00 23.00 78.00

ST I, ST II,

W I, W II,

W III, W IV,

B, C, D

32.74

North

KaranpuraCCL

Ranchi, Hazaribagh, Chatra,

Palamu and

Latehar/Jharkhand

2.00 9.00 - 11.00 B, E, F 23.67

Central India

CoalfieldsSECL

Korea, Sarguja Shahdol,

Umaria, Anuppur/Madhya

Pradesh and Chhattisgarh

56.00 15.00 1.00 72.00SC II, A, B,

C, D, F28.63

Raniganj ECL/BCCL

Burdwan, Bankura, Purulia,

Birbhum/West Bengal,

Dhanbad/Jharkhand

84.00 16.00 7.00 107.00SC I, ST I

A, B, C, D20.97

Rajmahal/

DeogarhECL

Deogarh and Godda/

Jharkhand- 4.00 - 4.00 D, F 11.14

East Bokaro CCL Bokaro/ Jharkhand 8.00 10.00 1.00 19.00W III, W

IV,E, F10.47

West Bokaro CCLRamgarh, Hazaribagh/

Jharkhand6.00 9.00 - 15.00

W III, W

IV,C, E6.57

Kamptee WCL Nagpur/Maharashtra 9.00 3.00 - 12.00 B, C, D, E 4.78Mand Raigarh SECL Raigarh/Chhattisgarh 2.00 2.00 - 4.00 D, F 5.24

Umrer Nand

BanderWCL Nagpur/Maharashtra 1.00 2.00 - 3.00 C, D 4.31

South

KaranpuraCCL

Ramgarh, Hazaribagh/

Jharkhand8.00 6.00 1.00 15.00 B, C, D, E 4.98

Pench-Kanhan WCL Chindwara/Madhya Pradesh 15.00 7.00 2.00 24.00W II, B,

C,D, E5.00

Pathakhera WCL Betul/ Madhya Pradesh 8.00 - - 8.00 D, E 3.56

Makum NEC5 Tinsukia/Assam 5.00 3.00 - 8.00 A (Assam) 1.16

Ramgarh CCL Ramgarh/Jharkhand - 1.00 - 1.00 W III 1.36

Giridih CCL Giridhih/Jharkhand - 2.00 - 2.00 E 0.93

Total 273.00 163.00 35.00 471.00 461.86

Rated

Capacity as of

31st Mar 2010

(mn tons p.a)

Type of Mines


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Coal Production

.

Raw Coal: Non-Coking Coal includes NEC (Assam grade) coal; Coking Cola includes semi-coking coal andweakly coking coal.

They produce a significant proportion of their non-coking coal from mines operated in the Korba,

Singrauli,Talcher, Ib Valley and Wardha Valley coalfields. Most of their coking (metallurgical) coal is produced at the Jharia coalfield.

Raw Coal

They continue to expand their raw coal production capacities. As of March 31, 2010:

77 projects with an aggregate proposed capacity addition of 184.78 million tons per annum, involving

an aggregate proposed capital expenditure of Rs.110,064.60 million had received project investment

approval from their Board and the Board of Directors of the relevant Subsidiaries for theimplementation of these projects.

- Of the 77 projects for which requisite investment approval had been received as of March 31,

2010, 32 projects, with an aggregate capacity of 104.00 million tons per annum had beenimplemented by March 31, 2010, and had contributed 57.0 million tons towards their production

during fiscal 2010.

- 45 projects (comprising 22 capacity expansion projects for existing mines and 23 new mine

projects) had received relevant investment approval (of their Board and the board of directors ofrelevant Subsidiary companies) and were in various stages of mine planning and development:

(i) 25 projects, with an aggregate estimated capacity of 47.51 million tons per annum,

and involving an aggregate estimated capital expenditure of Rs.33,857.10 million,

were at various stages of implementation as of March 31, 2010, and are expected tobecome operational by the end of fiscal 2012;

(ii) 20 projects, with an aggregate estimated capacity of 33.27 million tons per annum,

and involving an aggregate estimated capital expenditure of Rs.25,762.79 million,involve longer gestation periods and are expected to become operational during the

12th Five-Year Plan (2013-2018) period.

Beneficiated Coal

Some of the raw coal they produce is used as feedstock for the production of beneficiated coal. They

currently operate 17 coal beneficiation facilities. They operate 5 non-coking coal beneficiation facilitieswith an aggregate designed feedstock capacity as of March 31, 2010 of 17.22 million tons per annum and

12 coking coal beneficiation facilities with an aggregate designed feedstock capacity as of March 31, 2010

of 22.18 million tons per annum.

They also intend to develop an additional 20 coal beneficiation facilities with an aggregate additional

proposed feedstock capacity of 111.10 million tons per annum to increase their production of beneficiatednon-coking coal and beneficiated coking coal.

2006 2007 2008 2009 2010

Production of:

Raw Coal (mn tons) 343.39 360.91 379.46 403.73 431.26 95.15

Non-Coking Coal (mn tons) 319.23 336.64 353.30 377.19 395.13 86.12

Non-Coking Coal as a % of Raw Coal Production 93.0% 93.3% 93.1% 93.4% 91.6% 90.5%

Non-Coking Coal from mines in Korba, Singrauli, Talcher,Ib Valley and Wardha Valley (as a % of total non-coking

coal production)

- - 68.7% 69.5% 70.7% 72.3%

Coking Coal (mn tons) 24.16 24.27 26.16 26.54 36.13 9.03

Coking Coal as a % of Raw Coal Production 7.0% 6.7% 6.9% 6.6% 8.4% 9.5%

Beneficiated Coal (mn tons) 15.42 14.12 14.29 14.96 14.59 3.24

Beneficiated Non-Coking Coal (mn tons) 10.53 10.31 10.46 11.28 11.62 2.47

Beneficiated Non-Coking Coal as a % of Beneficiated

Coal Production68.3% 73.0% 73.2% 75.4% 79.6% 76.2%

Beneficiated Coking Coal (mn tons) 4.89 3.81 3.83 3.68 2.97 0.77

Beneficiated Coking Coal as a % of Beneficiated Coal

Production31.7% 27.0% 26.8% 24.6% 20.4% 23.8%

3 months ended

Jun 30, 2010

Year ended


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Coal SalesThey have 12 regional sales offices across India.

Coal is sold to their customers pursuant to long-term FSAs (Fuel Supply Agreements), separate memorandaof understanding entered into with customers or under their E-Auction scheme.

Open Cast Mines and Underground Mines

As of March 31, 2010, they operated 163 open cast mines, 273 underground mines and 35 mixed mines

(which include both underground mines and open cast mines). Most of their current raw coal production is

from their open cast mines.

They intend that all new open cast mines with coal production capacities greater than 2.5 million tons per

annum not linked to pit head customers will eventually be equipped with dedicated coal beneficiation

facilities.

Mining Rights and acquisition of land

The mines in which they carry out mining activities were granted to them pursuant to either

(i) The grant of deemed mining lease pursuant to the Coal Mines (Nationalisation) Act, 1973: Theyenjoy the status of a deemed lessee of the concerned State Government in relation to all the

nationalized coal mines.

(ii) The grant of mining rights pursuant to the Coal Bearing Areas (Acquisition & Development) Act,

1957 (CBA Act): They acquire ownership on the surface rights and mining rights on the coal-bearing areas. In certain circumstances where the rights, which are originally granted through a

mining lease, are acquired pursuant to the CBA Act, they are deemed to have become the lessee of

the state government from the date of such vesting.

A majority of the mines they inherited during nationalization of the coal industry were underground minesleased under the MMDR Act. However, currently, a majority of their production is derived from open castmines that were acquired pursuant to the CBA Act, for which they own the surface rights and the mining

rights.

Exploration ActivitiesExploration of coal deposits in India is carried out in 2 stages: regional exploration and detailed

exploration.

2006 2007 2008 2009 2010

Dispatch of:

Raw Coal (mn tons) 332.20 350.30 374.57 400.75 415.22 100.93

Non-Coking Coal (mn tons) 309.49 326.20 349.32 373.24 381.09 91.00

Non-Coking Coal as a % of Raw Coal Dispatch 93.0% 93.1% 93.3% 93.1% 91.8% 90.2%Coking Coal (mn tons) 23.23 24.10 25.25 27.51 34.13 9.93

Coking Coal as a % of Raw Coal Production 7.0% 6.8% 6.6% 6.8% 8.2% 9.8%

Raw Coal - under the E-Auction Scheme (mn tons) 28.79 48.87 45.73 9.30

8.1% 12.9% 11.6% 9.6%

Beneficiated Coal (mn tons) 15.42 14.15 14.46 14.91 14.60 3.46

Beneficiated Non-Coking Coal (mn tons) 10.53 10.25 10.58 11.21 11.66 2.70

Beneficiated Non-Coking Coal as a % of Beneficiated

Coal Dispatch68.3% 72.4% 73.2% 75.2% 79.9% 78.0%

Beneficiated Coking Coal (mn tons) 4.89 3.90 3.88 3.70 2.94 0.76

Beneficiated Coking Coal as a % of Beneficiated Coal

Dispatch31.7% 27.6% 26.8% 24.8% 20.1% 22.0%

3 months ended

Jun 30, 2010

Year ended

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Raw Coal

Production

(mn tons)

% of raw

coal

production

Open Cast Mine

Production297.57 86.7% 317.59 88.0% 335.92 88.5% 359.77 89.1% 388.01 90.0% 85.50 89.8%

Underground

Mine Production45.82 13.3% 43.32 12.0% 43.54 11.5% 43.96 10.9% 43.25 10.0% 9.65 10.2%

Total 343.39 100.0% 360.91 100.0% 379.46 100.0% 403.73 100.0% 431.26 100.0% 95.15 100.0%

2006

3 months ended Jun 30,

2010

Particulars

2007 2008 2009 2010

Fiscal


6/12



Regional exploration - Carried out by government organizations such as Geological Survey of India

("GSI") of the MoM, Detailed Exploration - The relevant coal companies typically undertake detailed exploration. They

conduct their detailed exploration and drilling activity through CMPDIL (Central Mine Planning &

Design Institute Limited)

They are currently conducting detailed exploration activities in 12 coalfields through CMPDIL and

exploring potential open cast deposits (including expansion projects) in 14 blocks. In addition, they are

studying the feasibility of mining underground coal deposits in 14 coal blocks.

Transportation, Infrastructure and Logistics

MGR Merry go round, rail circuit(1) Includes movement of coal by rail to ports for coastal shipment.

(2) Includes coal transported directly through conveyor belts / rope ways to pit head customers.

Customers

Their customers include large companies, including thermal power generating companies, steel producersand industrial companies both in the public and the private sector with whom they have long-standing

relationships.

(1) Includes coal sold to small customers through state and central agencies and e-auction, open sales scheme andbrick sector

Rs mn 2008 2009 2010 3 months endedJun 30, 2010

Exploration and Drilling Expenses 988.82 1,738.63 2,486.51 647.60

2006 2007 2008 2009 2010

Raw Coal

Production (mn

tons)

% of Coal

Dispatch

Raw Coal

Production (mn

tons)

% of Coal

Dispatch

Raw Coal

Production

(mn tons)

% of Coal

Dispatch

Raw Coal

Production

(mn tons)

% of Coal

Dispatch

Raw Coal

Production

(mn tons)

% of Coal

Dispatch

Raw Coal

Production

(mn tons)

% of Coal

Dispatch

Rail (1) 165.78 49.8% 180.69 51.6% 188.94 50.5% 191.87 47.9% 193.77 46.7% 47.66 47.2%

MGR 80.61 24.2% 78.82 22.5% 81.02 21.6% 82.68 20.6% 86.57 20.8% 19.81 19.6%

Road 73.50 22.1% 77.82 32.2% 91.45 24.4% 113.14 28.2% 122.33 29.5% 30.81 30.5%

Others (2) 12.83 3.9% 12.96 3.7% 13.17 3.5% 13.06 3.3% 12.55 3.0% 2.65 2.6%

Total 332.72 100.0% 350.30 100.0% 374.57 100.0% 400.75 100.0% 415.22 100.0% 100.93 100.0%

3 months ended June 30,

2010

Fiscal

Raw Coal

Dispatch

(mn tons)

% of raw

coal

dispatch

Raw Coal

Dispatch

(mn tons)

% of raw

coal

dispatch

Raw Coal

Dispatch

(mn tons)

% of raw

coal

dispatch

Raw Coal

Dispatch

(mn tons)

% of raw

coal

dispatch

Raw Coal

Dispatch

(mn tons)

% of raw

coal

dispatch

Raw Coal

Dispatch

(mn tons)

% of raw

coal

dispatch

Power (including captive

power plants)280.74 84.4% 289.56 82.7% 309.83 82.7% 326.06 81.4% 331.94 79.9% 78.87 78.2%

Steel (including sponge

iron)18.87 5.7% 19.29 5.5% 22.12 5.9% 19.74 4.9% 21.51 5.2% 5.16 5.1%

Cement 9.87 3.0% 9.40 2.7% 7.03 1.9% 6.62 1.7% 6.44 1.6% 1.71 1.7%

Other industries 8.11 2.4% 6.63 1.9% 8.32 2.2% 7.19 1.8% 8.84 2.1% 2.59 2.6%

Small and medium

enterprises (1)15.13 4.5% 25.42 7.3% 27.27 7.3% 41.14 10.3% 46.49 11.2% 12.60 12.5%

Total 332.72 100.0% 350.30 100.0% 374.57 100.0% 400.75 100.0% 415.22 100.0% 100.93 100.0%

3 months ended June

30, 20102006 2007 2008 2009 2010

Fiscal


7/12



Other than certain insignificant quantities of coal sold in Nepal and Bangladesh, they sell all of their coal in

India.Non-coking coal used in the thermal power industry constitutes most of their coal production. Coal sold to

government-owned and controlled power generation companies and utilities contribute a substantial

majority of their total sales.

Distribution of Coal

Coal Distribution through FSAs and through State Nominated Agencies

The NCDP (New Coal Distribution Policy) stipulates that customers with coal requirements more than

4,200 tons per annum are required to enter into FSAs with the Company.(i) Valid linked existing customers as of the date of introduction of the NCDP with annual

coal requirements up to 4,200 tons per annum were provided with an option to either:

- Enter into FSAs with the Company directly for the supply of coal;- Access their coal requirements through the applicable agencies and associations

nominated by the respective State Governments ("State Nominated Agencies").

(ii) All new customers with coal requirement up to 4,200 tons per annum will receive coalthrough State Nominated Agencies only.

E-Auction Scheme

The E-Auction scheme of coal has been introduced to provide access to coal for customers who were

not able to source their coal requirement through the available institutional mechanisms under the

NCDP for various reasons.

Pricing of Coal

The principal factors that affect the price of their raw coal and beneficiated coal are the quality of their raw

coal (grade of coal) and the mode of sale, i.e. whether such coal is sold under their FSAs, under their E-

Auction scheme or under specific memoranda of understanding entered into with the customer.

International Initiatives Coal Videsh a special division to streamline their activities related to sourcing of coal from

international sources to bridge the demand-supply gap in India has been established.

They have successfully bid in a global tender floated by the Government of Mozambique and acquired

prospecting licenses in August 2009 for 2 coal blocks in Mozambique for further exploration and

development of these coal blocks over a period of 5 years. They have established a wholly ownedsubsidiary CIAL in Mozambique.

They have initiated the process of selecting coal companies as prospective strategic partners for their

international initiatives in Australia, the United States, South Africa and Indonesia, countries fromwhich coal is currently imported into India.

They have commenced the due diligence process for and are currently evaluating the proposals for

acquisition of coal assets in Australia, Indonesia and the United States. In their annual plan for fiscal 2011, they have earmarked Rs.60,000 million for the acquisition of

international coal assets.

They have established a joint venture company, ICVL, with NTPC, SAIL, RINL and NMDC for the

acquisition of metallurgical and thermal coal assets outside India to provide supply of coal from

international sources to meet part of the requirements of SAIL and RINL.

2008 2009 2010

3 months

ended June 30,

2010

Volume of Raw Coal sold to 5 largest

customers as a % of total volume of coal

dispatched

50.8% 49.9% 47.9% 45.1%

Volume of Raw Coal sold to NTPC as a %

of total volume of coal dispatched27.7% 26.7% 26.7% 24.9%


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Offer Size

(Rs in crores)

Registered Office: Coal Bhawan, 10, Netaji Subhas Road, Kolkata 700 001, West Bengal;

Shareholding Pattern (%)

(*) Assuming that the Offer is fully subscribed.

PromotersThe President of India acting through the MoC (Ministry of Coal, Government of India).

FinancialsExtracts of the Restated Consolidated Statement of Profit & Loss Account(Rs in millions)

(Source: Red Herring Prospectus)

Strengths

The largest coal producer and reserve holder

in the world

Well positioned to capitalize on the high

demand for coal in India

Track record of growth and cost efficientoperations

Strong track record of financial performance

Strong capabilities for exploration, mine

planning, research and development Experienced senior management team and

large pool of skilled employees

Growth Strategies

Continue to increase production and capitalize

on the significant demand-supply gap for coal

in India

Improve realizations through increased sales of

beneficiated coal and higher quality coal, andthe use of E-auction pricing mechanisms

Enhance their profitability and maintain their

competitiveness by improving operating and

cost efficiencies Continue to increase their reserve base in India

Acquire strategic international resources or

mining rights and identify joint developmentopportunities

Continue to focus on developing

environmentally and socially sustainable

operations

Retail Discount and Employee

Discount will be declaredatleast 2 days prior to the issue

# of Shares

(*) (*)

Public Offer 631,636,440 (*) (*)Employee Reservation 63,163,644 (*) (*)Net Issue 568,472,796 (*) (*)

QIBs 284,236,398 (*) (*)Non Institutional 85,270,919 (*) (*)Retail 198,965,479 (*) (*)

Category

Amount

No. of Shares % Holding No. of Shares % Holding

Promoter 6,316,363,800 99.99% 5,684,727,360 89.99%

Others 600 Negligible 600 Negligible

Public - - 631,636,440 10.00%Total 6,316,364,400 100.00% 6,316,364,400 100.00%

Post-Offer (*)

Category

Pre-Offer

Pre Offer Shares 6,316,364,400Post Offer Shares 6,316,364,400

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Sales 287,018.31 296,021.85 326,338.60 387,888.30 446,152.51 114,356.36

Total Income 340,087.99 350,054.07 386,166.97 460,640.65 525,922.92 131,100.32

Expenditure 252,831.33 264,412.28 305,374.07 403,531.12 385,737.04 93,632.54

Profit before tax 87,541.62 85,862.35 81,904.18 57,386.71 139,649.28 37,356.71PAT 61,136.01 42,052.69 42,850.07 40,626.23 98,336.99 25,217.78

Quarter ended Jun

30, 2010

For the year ended March 31st


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Extracts of the Restated Consolidated Statement of Assets and Liabilities(Rs in millions)


Extracts of the Restated Consolidated Statement of Cash Flows(Rs in millions)


Ratios


Peer ComparisonThey are a coal mining company and there is no other listed peer in India with which they can be compared with.


2006 2007 2008 2009 2010

Earnings per Share 9.68 6.66 6.78 6.43 15.57 3.99

Net Asset Value per Share- (Rs) 22.57 25.67 27.23 30.09 40.92 44.94

Return on Net Worth (%) 0.43 0.26 0.25 0.21 0.38 0.09

As at Jun

30th 2010

Particulars Year ended March 31

2006 2007 2008 2009 2010

Net Cash Flow from /(used in) Operating Activit ies 83,676.53 59,932.60 88,689.97 117,193.50 133,199.41 (4,494.95)

Net Cash from / (used in) Investing Activities (12,445.78) (15,342.00) (18,349.83) (16,618.90) (17,746.56) (3,519.75)

Net Cash from / (used in) Financing Activities (16,827.86) (19,570.30) (20,018.00) (13,239.31) (21,625.34) (2,299.55)

Net increase / (decrease) in Cash and Cash Equivalents 54,402.90 25,020.29 50,322.14 87,335.29 93,827.51 (10,314.25)

Cash and Cash Equivalents at the beginning of the period/year 79,869.48 134,272.37 159,292.66 209,614.80 296,950.09 390,777.60

Cash and Cash Equivalents at the end of the period/year 134,272.37 159,292.66 209,614.80 296,950.09 390,777.60 380,463.35

As at Jun

30th 2010Particulars For the year ended March 31

2006 2007 2008 2009 2010

Fixed Assets 114,514.61 116,543.31 120,070.56 129,282.72 142,589.60 142,976.07

Investments 22,445.20 20,258.77 17,179.01 15,051.79 12,821.40 12,764.12

Net Interest in Joint Venture - - - 2.00 2.00

Deferred Tax Asset 7,280.76 6,602.16 7,877.52 9,548.29 9,657.55 9,850.88

Current Assets, Loans and Advances

Inventories 29,134.45 31,250.08 34,073.57 36,665.91 44,014.96 45,350.33

Sundry Debtors 18,840.52 16,822.29 16,571.58 18,474.84 21,686.48 20,265.25

Cash and Bank balances 134,272.37 159,292.66 209,614.80 296,950.09 390,777.60 380,463.35

Loan and Advances 65,004.26 78,184.36 102,662.87 117,270.50 86,654.64 86,490.12

Total Current Assets 247,251.60 285,549.39 362,922.82 469,361.34 543,133.68 532,569.05

Total 391,492.17 428,953.63 508,049.91 623,244.14 708,204.23 698,162.12

Less: Liabilities and Provisions

Secured Loans 2,477.18 3,327.05 2,247.07 1,804.63 4,669.08 1,002.80

Unsecured Loans 20,712.72 18,111.93 16,592.03 19,680.17 16,199.43 16,791.73

Current Liabilities and Provisions 216,437.77 236,171.42 305,944.58 399,422.33 413,846.87 380,703.03

Minority Interest - - - 18.97 236.07 236.07

Shifting and Rehabilitation Fund 4,859.46 6,880.78 9,458.78 12,238.43 14,774.27 15,548.70

Deferred Tax Liabilities 4,468.65 2,331.22 1,800.62 - - -

Total 248,955.78 266,822.40 336,043.08 433,164.53 449,725.72 414,282.33

Net Worth 142,536.39 162,131.23 172,006.83 190,079.61 258,478.51 283,879.79

Represented by

Share Capital 63,163.64 63,163.64 63,163.64 63,163.64 63,163.64 63,163.64

Reserves and Surplus 79,372.75 98,967.59 108,843.19 126,916.21 195,330.22 220,731.50

Miscellaneous Expenditure - - - 0.24 15.35 15.35

Net Worth 142,536.39 162,131.23 172,006.83 190,079.61 258,478.51 283,879.79

As at Jun

30th 2010Particulars

As at 31st March


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Please refer to the Red Herring Prospectus for Risk Factors

Glossary Measured Resources - That part of a mineral resource for which quantity, grade or quality, densities, shape, physical

characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriateapplication of technical and economic parameters, to support production planning and evaluation of the economic

viability of the deposit.

Indicated Resources - That part of a mineral resource for which quantity, grade or quality, densities, shape andphysical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of

technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit

Inferred Resources -That part of a mineral resource for which tonnage, densities, shape, physical characteristics,

grade and mineral content can be estimated with a low level of confidence.

Proved Reserves -The economically mineable part of aMeasured Mineral Resource

Probable Reserves -The economically mineable part of an Indicated Mineral Resource, and in some cases

Measured Mineral Resource

Beneficiation / washing Process for cleaning of coal


11/12



Disclaimer

This document has been prepared for your information only. In rendering this information, we assumed and

relied upon, without independent verification, the accuracy and completeness of all the data that was publicly

available to us. The information has been obtained from the sources we believe to be reliable as to the accuracy

or completeness. This should not be construed as an offer to sell or buy the securities and the informationcontained herein is meant for the authorized recipients only and is not for public distribution. No part or portion

of this document shall be duplicated, reproduced, reprinted or redistributed to any person or persons. This

information is given in good faith and we make no representations or warranties, express or implied, as to the

accuracy or completeness of the information and shall have no liability to you or your representatives arisingfrom use of this information.

We shall not be liable for any direct or indirect losses arising from the use of the information contained hereinand accept no responsibility for statements made otherwise issued or any other source of information received by

you and you would be doing so at your own risk. The investment as mentioned in the document may not be

suitable for all investors. Investors may take their own decisions based on their specific investment objectives

and financial position and using such independent advisors, as they believe necessary.You are advised tocarefully read the entire offer document including all the Risk Factors mentioned in the offer document issued by

the Issuer before making any investment decisions. Neither we, nor our directors or employees are responsiblefor any loss that you may incur by the use of information contained in this document.


12/12


JM Financial Services Pvt Ltd Please see additional important disclosure at the end of this report Private & ConfidentialJM Financial Services Pvt. Ltd.Regd : JM Financial Services Pvt. Ltd141, Maker Chambers III, Nariman Point Mumbai 400021.

NSE C it l M k t INB 231054835 | F&O S t INF 231054835 | BSE C h M k t INB 011054831

MumbaiCorporate Office

Apeejay House.Dinshaw Vachha Road,

Churchgate, Mumbai 400020Tel : + 91 22 67040404

Fort2,3&4 Kamanwala Chambers,

Sir P M Road, Fort,Mumbai - 400 001

Tel: + 91 22 66333030

Vile Parle1st Floor, Patel House,

M. G. Road, Next to Bank of BarodaVile Parle East, Mumbai - 400 057

Tel : + 91 22 67077440

Andheri

2/003, Anushka, New Link RoadOpp. Oshiwara Police Station,

Oshiwara, Andheri (W), Mumbai - 400 053Tel : + 91 22 6619 1600

Malad

Palm Court, 4th Floor, M wing, Link Road,

Malad (West), Mumbai - 400 064Tel : + 91 22 6761 7000

Borivali

118, Dattani Trade Center, 1st

FloorShop No 6,

Chandavarkar Road, Borivali West,Mumbai - 400 092

Tel : + 91 22 66959120

Ghatkopar

424/ 425, 4th Floor, Kailash Plaza,Vallabh Baugh Lane, Ghatkopar (E),

Mumbai - 400 077Tel: + 91 22 67104559

New Delhi114-Himalaya House, 11

thfloor

23, Kasturba Gandhi Marg,

New Delhi - 110 001

Tel : +91 11 30925500 (011) 4130 5650

Our Network

Ahmedabad

Ashram RoadG - 10, Chinubhai Center,

Near Nehru bridge Corner, Ashram Road,

Ahmedabad - 380 009Tel : + 91 79 2657 6666, 079-30013722

Atira BranchB-101 - 104, Shivalik Plaza,

Opp.AMA, IIM Road,

Nr. Panjarpole Cross RoadAmbawadi, Ahmedabad 380 015.

Tel : +91 79 3982 6700

Bengaluru

Residency Road97/4, Residency Road,

Bengaluru - 560 025Tel : +91 80 3091 2400 (080) 2299 7711

Malleshwaram

199, 1

ST

Floor, Yathi Raj Mutt Building,11th Cross, Malleshwaram,Bengaluru 560 003.Tel : +91 80 3983 0600 (080) 41282444,

41228380

M.G Road

14th floor, Premises No. 15-16/58-59Vayudooth chambers,

No. 15 - 16, M. G. Road,Bengaluru- 560 001

Tel : +91 80 3092 6900

Chennai

Gee Gee Crystal5th Floor, 91-92,

Dr. Radha Krishnan Salai, Mylapore,Chennai - 600 004

Tel : +91 44 42255666

Indore

D.M.Tower, UG 7 & 8, Ground Floor,21/1 Race Course Road, Indore - 452 004,

Tel : +91 731 3072 111

Secunderabad3rd Floor, 305, Jade Arcade,

Opp Paradise Hotel, M.G. Road,Secunderabad - 500 003

Tel : +91 40 39825200

Hyderabad9-10, Uma Chambers, 3rd Floor,Road No 1, Banjara Hills, (Nagarjuna Hills),

Hyderabad - 500 034

Tel : +91 40 66360009

KolkattaKankaria Estate, 6 Little Russell Street,

Ground & 8th Floor, Kolkatta - 700 071

Tel : + 91 33 39870330 (033) 2281 6690-95

Pune

205, Business Guild,

Opp Krishna Dining Hall,Law College Road, Erandwane,

Pune - 411 004Tel : +91 20 39871600 (020) 6603 3730,

66207735/6

Jaipur

G-7 & G-8, Brij Anukampa,Plot no. K- 13, Ashok Marg,

C-scheme, Jaipur - 302 001Tel : +91 141 3984400

Rajkot

202, Solitaire, 2nd Floor, Swami Vivekananda

Marg, Near Municipal Commissioner'sBungalow,Ramakrishna Nagar, Rajkot - 360 002

Tel : +91 20 39871600 (0281) 3984000 /

3984101 3984110

Surat

407, 4th Floor, 21-Century BusinessCenter,Near Udhana Char Rasta, (0261) 3984000

Ring Road, Surat 395 002Tel : +91 261 3984000

Vadodara

G1 - Ground Floor, "Soham",49 Alkapuri Society, Opp. HDFC Bank,

Alkapuri, Vadodara - 390 007.Tel : +91 265 6626387

VizagNandan Nirman,

Door No: 9-1-224/4/3, 1st

floorCBM Compound, Near Ramatalkies Junction.,

Visakhapatnam - 530 003.Tel : +91 891 3983737

Documents

Coal India Limited - Product Note