Coal India Limited
IPO Review October 15, 2010 Rating matrix
Coal India Limited
Rating
:
Unrated
Price band Rs 225- 245
Issue Details Issue opens
October 18, 2010
Issue closes
October 21, 2010
Issue size
Rs 14211-15475 crore
No of shares on offer
63.16 crore
- Fresh Issue to the public
56.84 crore
QIB ( 60% )
28.42 crore
Non Institutional ( 10% )
8.52 crore
Retail ( 30% )
19.89 crore Rs 142118-154750 crore
Market cap (Post issue)
Coal India Limited (CIL), a Navratna PSU, is the largest coal producing company in the world with a total coal production of ~445.9 million tonnes (MT) in FY10. In terms of reserves also, it is the world’s largest coal company with proven reserves of ~18.9 billion tonnes and resources of ~64.3 billion tonnes. CIL has garnered Rs 46684.3 crore and Rs 11940.3 crore as revenue for FY10 and Q1FY11, respectively, while PAT (restated) was reported at Rs 9829.41 crore and Rs 2521.78 crore, respectively. EBITDA margin for the same period remained at ~22% and 26%, respectively. As on March 31, 2010, the company holds cash reserves of Rs 39700 crore with net debt- equity ratio at 1.4. Largest producer and supplier of coal
Objects of the Issue Particulars
Amount (Rs crore)
To meet the disinvestment targets of GOI,
Rs 14211-15475 crore
All proceeds would go to the GOI
Fact Sheet Pre-Issue
Post-Issue
631.6
631.6
Promoters (%)
100
90
Public & Others (%)
0.0
10
No of shares (In crore)
Financial Summary (Rs crore) Net Sales EBITDA Reported PAT Post issue diluted EPS EBITDA margins (%) PAT margins (%)
Size does matter…
FY09 40810.8 2614.7 4062.8 6.4 6.4% 10%
FY10 46684.3 10453.0 9829.4 15.6 22.4% 21%
Analyst’s name Pankaj Pandey [email protected] Goutam Chakraborty [email protected] Neeraj Lodha [email protected]
Q1FY11 11940.3 3106.0 2521.8 4.0 26.0% 21%
Being the largest producer of coal, CIL contributes 80% of the country’s total coal output. Open cast mines contribute 90% to CIL’s total coal production. Though CIL virtually supplies its coal to all relevant industries, 80% of the coal requirement by the country’s power sector is met by CIL. At present (FY10), ~96.5% of the company’s revenue is contributed by raw coal. Focus on beneficiation and margin expansion CIL has been focusing on increasing its beneficiated coal capacity to ~111.1 MT by 2017 from ~13 MT in FY10. Currently, the cash cost of production of coal from open cast mines is Rs 745/tonne (among the lowest in the world) while the average selling price is Rs 1097/ tonne.
Concerns Major concerns for the company are a) huge employee costs (~36% of the revenue in FY10), b) current issues related to forest and environment clearances for new mining projects that may delay the projects, c) issues related to Naxalites and mafia in its major operational area and d) infrastructure bottlenecks.
Valuations At the higher IPO price band of Rs 245, CIL discounts its FY10 EPS (post issue) and FY10 EV/EBITDA by 15.7x and 11.3x, respectively. On EV/tonne (reserve), the stock is available at Rs 62.4 on FY10 basis. Exhibit 1: Key Financials (Rs crore) Net Sales EBITDA Reported PAT Margin(%) Post issue diluted EPS ROE (%) ROCE (%)
FY07 31542.7 6908.6 4205.3 13.3 6.7 25.9 47.2
FY08 34608.4 6257.8 4285.0 12.4 6.8 24.9 43.7
Source: CIL RHP , ICICIdirect.com Research * at the higher price band
ICICIdirect.com | Equity Research
FY09 40810.8 2614.7 4062.8 10.0 6.4 21.4 27.9
FY10 46684.3 10453.0 9829.4 21.1 15.6 38.0 50.5
Q1FY11 11940.3 3106.0 2521.8 21.1 4.0
Company Background
Coal India is the world’s largest coal producing company both in terms of raw coal production (431.3 MT in FY10) and reserves (18.9 billion tonne)…
Coal India Ltd (CIL), established in 1973 as a wholly-owned subsidiary of the Government of India, is the world’s largest coal producing company both in terms of production as well as reserves. The company in FY10 has produced ~445.9 MT of coal. Out of this, ~431.3 MT was raw coal. The company has total reserves of ~18.9 billion tonnes comprising ~10.6 billion tonnes of proved reserve and 8.3 MT of probable reserves. CIL also has huge resources of ~64.2 billion tonnes, which constitutes 51.3 billion tonnes, 9.9 billion tonnes and ~3 billion tonnes measured, indicated and inferred resources, respectively. As of March 31, 2010, CIL operated 471 mines in 21 major coalfields across eight states in India. Out of the total mines operated, the number of open cast mines, underground mines and mixed mines remained 163, 273 and 35, respectively. CIL has 11 direct and indirect subsidiaries in India, out of which nine are engaged in coal production. One of the subsidiaries, viz. Central Mine Planning and Design Institute Ltd (CMPDL) provides technical and consultancy services to CIL as well as third-party clients regarding coal exploration, mining, processing and related activities. CIL along with SAIL, NTPC, NMDC and RINL has set up a joint venture International Coal Venture Ltd (ICVL) to scout for acquisition of coal mines outside India.
Exhibit 2: Corporate structure of Coal India Limited President of India, acting through the ministry of Coal, Government of India
90% (Post-Issue)
Coal India Limited
100%
100%
100%
100%
Central Mine planning & design Institute Ltd *(Rs 457.2 crore)
Eastern Coalfields Limited *(Rs 5829.1 crore)
Northern Coalfields Limited *(Rs 8140.5 crore)
South Eastern Coalfields Limited. *(Rs 10486.6 crore)
100% Western Coalfields Limited *(Rs 6483.4 crore)
100%
100%
Mahanadi Coalfields Limited *(Rs 7481.0 crore)
Central Coalfields Limited *(Rs 7249.6 crore)
60%
70%
MJSJ Coal Ltd.
MNH Shakti Ltd
100%
Bharat Coking Coal Limited *(Rs 6158.4 crore)
100%
Coal India Africana Limited
Source: CIL RHP, ICICIdirect.com Research * Numbers are for FY10
ICICIdirect.com | Equity Research
Page 2
Exhibit 3: Revenue trend 50000
46684.3 40810.8
41000 31542.7
30755.1
16
34608.4
12
0
Revenue
FY10
5000 FY09
4
FY08
14000
FY07
8
FY06
23000
(%)
32000 (Rs crore)
After maintaining stable growth, revenues grew at a faster pace during the past couple of years. Since FY06, till FY10 revenues have grown at a CAGR of 9%…
20
Revenue growth (YoY)
Source: CIL RHP, ICICIdirect.com Research
Exhibit 4: EBITDA and EBITDA margin trend 12000
30
10453.0
10000 8000
25 7439.2
6908.6
20
6257.8
15
4000
3106.0
2614.7
10
EBITDA margin
Q1 FY11
EBITDA
FY10
0 FY09
0 FY08
5
FY07
2000
FY06
(Rs crore)
6000
(%)
The EBITDA margin has improved to 25% in Q1FY11 from 22% in FY10…
Source: CIL RHP, ICICIdirect.com Research
Exhibit 5: Bottomline trend 9829.4
10000 8000
160 120
6000
80 4285.0
4205.3
4062.8
4000
40
2000
0
0
(%)
Since FY06 till FY10, the consolidated PAT grew at a CAGR of ~10%…
(Rs crore)
6113.6
PAT
FY10
FY09
FY08
FY07
FY06
-40
PAT growth (YoY)
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 3
Investment Rationale Market leader with virtually no competitors CIL contributes 80% of the country’s total coal output. Therefore, virtually no competitor exists for the company as far as coal supply is concerned to different industries. Exhibit 6: Share of coal production in India
MEGH 1%
Others 6%
TISCO 2% SCCL 9% CIL 82%
Source: CIL RHP, ICICIdirect.com Research
Growing demand for coal to provide support With the rising demand for coal in India the company is very well positioned as the sole supplier of coal to industries like power, steel, cement, etc. In India, coal is the primary source of fuel for thermal power plants, which consumed 77% of the total coal produced in India during 2009. Exhibit 7: Sector wise demand for coal (million tonnes) in India 10th 5- year plan Sector
11th 5- year plan
2006-07
2007-08
2008-09
2009-10 2010-11E 2011-12 E
Actual supply
Actual supply
Actual Actual supply supply (P)
BE
MTA Revised
Coking coal Steel/Coke ovens & cokeries
17.3
16.99
16.58
17.23
17.92
26.02
Steel (Import)
17.88
22.03
21.08
23.47
32.59
42.48
Sub-total Coking
35.18
39.02
37.66
40.7
50.51
68.5
473
Non-Coking Coal Power utilities (Gen reqd)
307.92
332.4
362.93
371.66
442
Captive Power
28.13
29.31
32.74
39.08
44
47
Cement
19.67
21.27
18.85
18.98
30
33.35
Steel DR
17.47
20.92
19.78
23.09
28.8
28.96
BRK & others
55.51
61.37
77.07
88.82
61
62.43
Sub-total Non-Coking
428.7
465.27
511.37
541.63
605.8
644.74
463.88
504.29
549.03
582.33
656.31
713.24
Grand Total
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 4
Low cost of production Globally, CIL has been one of the least cost producers with cash cost of production of Rs 745/tonne for FY10 and Rs 848/tonne for Q1FY11 for raw coal from open cast mines. Since open cast mines contribute 90% of its total output, the overall cash cost of production has also been considerably cheaper. Exhibit 8: Cash cost (Rs/ tonne) for raw coal from open cast mines 900.0 847.9
850.0 800.0 750.0 CIL has been one of the least cost producers in the world for raw coal from open cast mines…
737.9
745.0
714.8
700.0 650.0
Q1FY11
2010
2009
2008
600.0
Source: CIL RHP, ICICIdirect.com Research
Capacity expansion CIL has been continuously increasing its coal production to address the growing demand in the country. Till March 31, 2010, 77 projects with an aggregate proposed capacity addition of 184.78 mtpa, involving an aggregate proposed capital expenditure of Rs 11,006.46 crore were approved by the CIL board and the board of directors of the relevant subsidiaries for the implementation of these projects. Out of these 77 projects, 32, with an aggregate capacity of 104.00 mtpa, had been implemented by March 31, 2010. They have contributed 57.0 MT towards the production during fiscal 2010. As of March 31, 2010, of the 77 projects, 45 identified projects (comprising 22 capacity expansion projects for existing mines and 23 new mine projects) had received the requisite investment approval. They were in various stages of mine planning and development: a) 25 projects, with an aggregate estimated capacity of 47.51 mtpa, and involving an aggregate estimated capital expenditure of Rs 33,85.71 crore, were at various stages of implementation as of March 31, 2010. They are expected to become operational by the end of fiscal 2012; and b) 20 projects, with an aggregate estimated capacity of 33.27 mtpa and involving an aggregate estimated capital expenditure of Rs 25,76.28 crore, involve longer gestation periods and are expected to become operational during the 12th Five Year Plan (2013-2018) period Exhibit 9: Capex details Period
Capacity addition (MT)
Outlay (in Rs crore)
Mar-10
184.8
11006.5
Mar-12
47.5
3385.7
FY14-17
111.0
2330.0
33.3
2576.3
XII th five year plan (2013-18) Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 5
Scope for price hike CIL’s realisation has been much cheaper compared to its global peers. The company last revised prices for its products in October 2009. With the rising demand the company can justify a price hike. According to the management, it may be considered during July 2011. Exhibit 10: Price realisation (Rs/ tonne) 2500
2267
2000
1045
925
841
811
1747
1582
1480
1346
1500 1000
2238
2134
1890
500 0 2008
2009 Raw Coal
2010
E-Auction Sales
Q1FY11
Beneficiated Coal
Source: CIL RHP, ICICIdirect.com Research
Exhibit 11: Price range of CIL’s different coal grades wef October 16, 2009 Grade
Price range (in Rs/ tonne)
Non coking coal A
1280 to 2580
B
1130 to 2120
C
950 to 1860
D
790 to 1610
E
620 to 1090
F
480 to 870
G
350 to 700
Coking Coal Steel grade-I
3750
Steel grade-II
3140
Washery grade-I
1710 to 2740
Washery grade-II
1410 to 1990
Washery grade-III
1200 to 1480
Washery grade-IV
1120 to 1370
Others (SC-I/II/SLV)
1450 to 2150
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 6
Key concerns
Higher employee costs CIL has been incurring high employee costs (36% of the revenue in FY10) due to large number of employees. The company is expecting some wage revisions during 2011. CIL, however, has been continuously trying to reduce this by deploying workers in unviable mines to new projects.
Exhibit 12: CIL’s employee strength 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0
426077 370975
39081 16021
412350 357858
38475 15092
38868 15624
2008
2009 Executives
444041 390300
397138 343571
2010
Supervisors
Workmen
14968
38773
As on June 30,2010 Total
Source: CIL RHP, ICICIdirect.com Research
Environment/forest/Naxalites related issues
The company’s major operational area falls in the states mostly affected by Naxalites and local mafias. Though the company follows very sound CSR and has a policy to employ displaced people even without suitability, this can be a potential threat as far as carrying out smooth mining operations are concerned. Infrastructure bottlenecks Improper infrastructure, mainly with regard to logistics and transportation, has been a cause for concern for the company aiding a rise in inventory. A majority of CIL’s produce is dispatched through railways and shortage of wagons creates problems.
Exhibit 13: Modes of coal transportation Others 6% MGR 19% Rail 46%
Road 29% Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 7
Valuations At the higher IPO price band of Rs 245, CIL is discounting its FY10 EPS (post issue) and FY10 EV/EBITDA by 15.7x and 11.3x, respectively. On an EV/tonne (reserve) basis, the stock is available at Rs 62.4 on FY10 basis. Exhibit 14: Global peer valuation Company Peabody Enrgy China Shenhua Energy Exxaro resources ltd Bumi resources
ROE (%) P/BV (x) 2010 2011 2012 2010 2011 2012 18.3 23.1 23.3 3.1 2.5 2.0 17.4 17.3 16.2 2.6 2.2 2.0 34.0 34.0 33.0 2.0 2.0 1.6 19.5 23.9 22.8 2.8 2.2 1.9
P/E (x) EV/EBITDA (x) 2010 2011 2012 2010 2011 2012 16.8 11.3 9.5 8.4 6.5 5.6 15.2 13.3 12.2 8.6 7.5 7.1 8.4 6.9 5.7 9.8 7.1 5.6 14.6 9.7 8.8 7.6 5.5 4.7
Source: Bloomberg, ICICIdirect.com Research
Exhibit 15: Resources and reserves: Global peers Company
Market Cap (USD mn)
Resource(mn tonnes)
Reserves(mn tonnes)
13130 69728 6126 4877
9015 14850 14142 7782
6836 5860 1771 2904
Peabody Enrgy China Shenhua Energy Exxaro resources ltd Bumi resources Source: Bloomberg, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 8
Financial Summary
Exhibit 16: Profit and loss account FY07 31542.66
Net Sales % Growth Other Income Stores and spares Employee Exp. Total Exp. % Growth EBDITA Depreciation Interest PBT Tax Net Profit % Growth Equity Face Value Dividend % EPS
3215.20 5726.09 10097.53 24634.08 6908.58 1311.64 84.93 8586.24 2893.73 4205.27 631.64 10 0.36 6.66
FY08 34608.40 9.72% 3764.10 6085.22 12635.16 28350.62 15.09% 6257.78 1529.95 149.93 8190.42 3474.55 4285.00 1.90% 631.64 10 0.40 6.78
FY09 40810.81 17.92% 5119.65 6719.85 19742.09 38196.11 34.73% 2614.70 1662.93 156.50 5738.67 3663.24 4062.81 -5.19% 631.64 10 0.42 6.43
FY10 46684.29 14.39% 5240.84 6231.87 16655.52 36231.27 -5.14% 10453.03 1313.84 136.46 13964.92 4342.48 9829.41 141.94% 631.64 10 0.22 15.56
Source: CIL RHP, ICICIdirect.com Research
Exhibit 17: Balance sheet FY07 6316.36 9896.76 332.71 1811.19 18357.02 10392.54 1237.74 2025.88 3125.01 1682.23 15929.27 7818.44 28554.94 23617.14 4249.72 427.09 18357.02
Share Capital Reserves & Sur. Secured Loans Unsec. Loans Total Liabilities Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash & Bank Loans & Adv. Current Assets CL & Prov. Net Curr. Assets Net Deferred Tax Total Assets
FY08 6316.36 10884.32 224.71 1659.20 19084.59 10438.72 1539.20 1717.90 3407.36 1657.16 20961.48 10266.29 36292.28 30594.46 4751.95 607.69 19084.59
FY09 6316.36 12691.80 180.46 1968.02 21156.65 11008.78 1822.30 1505.18 3666.87 1847.48 29695.01 11727.05 46936.41 39942.33 5768.34 954.83 21156.62
FY10 6316.36 19528.91 466.91 1619.94 27932.13 12030.96 2090.88 1282.14 4401.77 2168.65 39077.76 8676.20 54324.38 41382.48 11440.87 965.76 27932.39
Source: CIL RHP, ICICIdirect.com Research
Exhibit 18: Ratios EPS Cash EPS Book Value EBIDTA Margin (%) Net Profit Margin (%) RONW ROCE Net Debt/Equity Enterprise Value (EV) EV/EBIDTA Sales to Equity Market Cap Market Cap to Sales Price to Book Value
FY07 6.7 8.7 25.7 21.9 13.3 25.9 47.2 -0.9 138939.7 20.1 1.9 154750.9 4.9 9.5
FY08 6.8 9.2 27.2 18.1 12.4 24.9 43.7 -1.1 135673.3 21.7 2.0 154750.9 4.5 9.0
FY09 6.4 9.1 30.1 6.4 10.0 21.4 27.9 -1.4 127204.4 48.6 2.1 154750.9 3.8 8.1
FY10 15.6 17.6 40.9 22.4 21.1 38.0 50.5 -1.4 117760.0 11.3 1.8 154750.9 3.3 6.0
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 9
Annexure 1: Facts about CIL Exhibit 19: CIL’s production of different grades of coal (million tonnes) 500.0
29.1
28.1
329.8
347.0
2006
2007
400.0
39.1
30.2
30.0
363.8
388.5
406.8
2010
200.0
2009
300.0
100.0
2008
0.0 Non coking coal
Coking coal
Source: CIL RHP, ICICIdirect.com Research
Exhibit 20: CIL’s coal production from different mines (million tonnes) 500 400 300
45.82
43.54
43.32
200 297.57
335.92
317.59
43.96
359.77
43.25
388.01
100
9.65 85.5
Underground Mines
Q1FY11
2010
Open Cast mines
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
Exhibit 21: Different types of coal production by CIL (million tonnes) 500 400
15.42
14.12
14.29
360.91
379.46
14.96
14.59
300 200
343.39
403.73
431.26 3.24
100
95.15
Benificiated coal
2010
Q1FY11
Raw Coal
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 10
Exhibit 22: Coal sales volume of different grades by CIL (million tonnes) 500 400 300 200
28.1
28.0
320.0
336.5
29.1
359.9
31.2
37.1
384.5
392.8 10.7
100
93.7
Coking Coal
Q1FY11
Non coking coal
2010
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
Exhibit 23: Coal sales volume of different types by CIL (million tonnes) 500 400 300 200
15.4
332.7
14.5
14.2
374.6
350.3
14.9
14.6
400.8
415.2 3.5
100
100.9 2010
Beneficiated Coal
Q1FY11
Raw Coal
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
Exhibit 24: Calorific value for different grades of CIL’s coal Non-Coking Coal grades
UHV (Kcal/kg)
GCV (Kcal/kg)
> 6200
>6401
B
5600-6200
5800-6401
C
4940-5600
5400-5801
D
4200-4940
4800-5401
E
3360-4200
4200-4801
F
2400-3360
3600-4201
G
1300-2400
3200-3601
Grade A
Source: CIL RHP, ICICIdirect.com Research
Exhibit 25: Moisture and ash content of CIL’s semi coking coal grades Grade I
Ash + moisture content < 19%
Grade II
Ash + moisture content > = 19% < 24%
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 11
Exhibit 26: Ash content of CIL’s coking coal grades Coking Coal grades
Ash content
Steel grade-I
< 15%
Steel grade-I
15%-18%
Washery grade-I
18%-21%
Washery grade-II
21%-24%
Washery grade-III
24%-28%
Washery grade-IV
28%-35%
Source: CIL RHP, ICICIdirect.com Research
Exhibit 27: Reserves and resources of CIL (million tonnes) Coal reserves Coal fields currently under production
As per ISP guidelines
As per JORC code
Total Extractable/Mi geological neable Coal reserves reserves
Total Extractable/Mi geological neable Coal reserves reserves
Korba
5551.4
2670.0
4572.3
Singrauli
3481.7
1891.1
3479.7
2393.4 1890.6
Talcher
10520.7
6297.0
9802.3
5172.1
IB-Valley
3815.5
2506.9
3813.5
2401.8
Wardha valley
2921.0
794.7
2851.3
682.9
Jharia
7042.7
1151.4
7024.0
498.5
North Karanpura
4579.1
2053.6
4578.3
2025.5
Central India Coal fields
3680.3
752.1
3146.1
513.0
Raniganj
9177.4
661.6
9121.4
332.5
Rajmahal
3303.6
545.7
3230.9
545.7
East Bokaro
3225.7
684.1
3214.1
549.0
West Bokaro
1762.9
453.1
1759.0
407.8
937.9
214.3
936.0
146.5
2070.5
659.3
2068.9
654.4
Kamptee Mand-Raigarh Umrer Nand Bander
558.5
214.9
558.5
209.4
1666.5
307.8
1663.7
187.2
Pench Kanhan
936.4
148.7
910.4
52.8
Pathakhera
218.2
87.0
217.9
76.6
Makum
335.1
92.6
333.7
50.5
Ramgarh
405.0
137.7
404.8
58.2
17.5
14.6
17.5
14.6
15.9
0.0
15.9
0.0
0.0
0.0
0.0
0.0
483.7
0.0
478.8
0.0
19.1
0.0
18.9
0.0
66726.4
22338.1
64218.0
18862.9
South Karanpura
Giridih Coalfields currently not under production Daltonganj Hutar Tatapani-Ramkola Dilli-jeypore Total
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 12
Annexure 2: Coal statistics Exhibit 28: India’s coal reserves (million tonnes) Type of Coal
Proved
Indicated
Inferred
Total
Coking Prime Medium
4614.4
698.7
0.0
5313.1
12572.5
11939.9
1880.3
26392.7
Semi
482.2
1003.3
221.7
1707.1
Total
17669.0
13641.9
2102.0
33412.9
Non Coking
91651.5
116922.2
33457.1
242030.8
477.7
89.7
799.5
1366.9
109798.2
130653.7
36358.6
276810.5
Tertiary Total
Source: CIL RHP, ICICIdirect.com Research
Exhibit 29: Performance of coal sector in India (million tonnes) Parameter
FY08 (Actual) FY09 (Actual) FY10 (Actual)
MTA target FY12
Physical performance Coal demand*
492.5
550.0
598.0
Indegenous coal supply
454.5
490.0
514.6
629.9
Coal production
457.0
492.8
532.1
629.9
Coal Imports Coking coal Thermal coal Net gap in demand supply
713.2
49.8
59.0
67.7
83.3
22.0
21.1
23.5
42.5
27.8
37.9
44.3
40.9
-11.8
1.0
15.7
0.0
Source: Annual Plan 2010- 11, MoC, GOI; CIL RHP, ICICIdirect.com Research MTA- Mid- Term Appraisal; *assessed by Planning Commission
Exhibit 30: Global coal production statistics (million tonnes) 2002
2003
2004
2005
2006
2007
2008
2009
China
Country
1454.6
1722.0
1992.3
2205.7
2373.0
2526.0
2803.3
3050.0
USA
992.7
972.3
1008.9
1026.5
1054.8
1040.2
1063.0
973.2
India
358.1
375.4
407.7
428.4
449.2
478.4
515.9
557.6
South Africa
220.2
237.9
243.4
244.4
244.8
247.7
252.6
250.0
Indonesia
103.4
114.3
132.4
152.7
193.8
216.9
229.0
252.5
Russia
255.8
276.7
281.7
298.3
309.9
313.5
328.6
298.1
Australia
340.8
350.4
364.3
375.4
382.2
392.7
397.6
409.2
Others
1127.1
1139.4
1155.0
1159.7
1178.9
1192.7
1203.6
1150.0
Total World
4852.7
5188.4
5585.7
5891.1
6186.6
6408.1
6793.6
6940.6
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 13
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Add, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: 20% or more; Buy: Between 10% and 20%; Add: Up to 10%; Reduce: Up to -10% Sell: -10% or more; Pankaj Pandey
Head – Research
[email protected]
ICICIdirect.com Research Desk, ICICI Securities Limited, 7th Floor, Akruti Centre Point, MIDC Main Road, Marol Naka, Andheri (East) Mumbai – 400 093 [email protected] ANALYST CERTIFICATION We /I, Pankaj Pandey PGDBM Goutam Chakraborty M SC (AG ECONOMICS) Neeraj Lodha CA research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.
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Coal India Limited
Rating
:
Unrated
Price band Rs 225- 245
Issue Details Issue opens
October 18, 2010
Issue closes
October 21, 2010
Issue size
Rs 14211-15475 crore
No of shares on offer
63.16 crore
- Fresh Issue to the public
56.84 crore
QIB ( 60% )
28.42 crore
Non Institutional ( 10% )
8.52 crore
Retail ( 30% )
19.89 crore Rs 142118-154750 crore
Market cap (Post issue)
Coal India Limited (CIL), a Navratna PSU, is the largest coal producing company in the world with a total coal production of ~445.9 million tonnes (MT) in FY10. In terms of reserves also, it is the world’s largest coal company with proven reserves of ~18.9 billion tonnes and resources of ~64.3 billion tonnes. CIL has garnered Rs 46684.3 crore and Rs 11940.3 crore as revenue for FY10 and Q1FY11, respectively, while PAT (restated) was reported at Rs 9829.41 crore and Rs 2521.78 crore, respectively. EBITDA margin for the same period remained at ~22% and 26%, respectively. As on March 31, 2010, the company holds cash reserves of Rs 39700 crore with net debt- equity ratio at 1.4. Largest producer and supplier of coal
Objects of the Issue Particulars
Amount (Rs crore)
To meet the disinvestment targets of GOI,
Rs 14211-15475 crore
All proceeds would go to the GOI
Fact Sheet Pre-Issue
Post-Issue
631.6
631.6
Promoters (%)
100
90
Public & Others (%)
0.0
10
No of shares (In crore)
Financial Summary (Rs crore) Net Sales EBITDA Reported PAT Post issue diluted EPS EBITDA margins (%) PAT margins (%)
Size does matter…
FY09 40810.8 2614.7 4062.8 6.4 6.4% 10%
FY10 46684.3 10453.0 9829.4 15.6 22.4% 21%
Analyst’s name Pankaj Pandey [email protected] Goutam Chakraborty [email protected] Neeraj Lodha [email protected]
Q1FY11 11940.3 3106.0 2521.8 4.0 26.0% 21%
Being the largest producer of coal, CIL contributes 80% of the country’s total coal output. Open cast mines contribute 90% to CIL’s total coal production. Though CIL virtually supplies its coal to all relevant industries, 80% of the coal requirement by the country’s power sector is met by CIL. At present (FY10), ~96.5% of the company’s revenue is contributed by raw coal. Focus on beneficiation and margin expansion CIL has been focusing on increasing its beneficiated coal capacity to ~111.1 MT by 2017 from ~13 MT in FY10. Currently, the cash cost of production of coal from open cast mines is Rs 745/tonne (among the lowest in the world) while the average selling price is Rs 1097/ tonne.
Concerns Major concerns for the company are a) huge employee costs (~36% of the revenue in FY10), b) current issues related to forest and environment clearances for new mining projects that may delay the projects, c) issues related to Naxalites and mafia in its major operational area and d) infrastructure bottlenecks.
Valuations At the higher IPO price band of Rs 245, CIL discounts its FY10 EPS (post issue) and FY10 EV/EBITDA by 15.7x and 11.3x, respectively. On EV/tonne (reserve), the stock is available at Rs 62.4 on FY10 basis. Exhibit 1: Key Financials (Rs crore) Net Sales EBITDA Reported PAT Margin(%) Post issue diluted EPS ROE (%) ROCE (%)
FY07 31542.7 6908.6 4205.3 13.3 6.7 25.9 47.2
FY08 34608.4 6257.8 4285.0 12.4 6.8 24.9 43.7
Source: CIL RHP , ICICIdirect.com Research * at the higher price band
ICICIdirect.com | Equity Research
FY09 40810.8 2614.7 4062.8 10.0 6.4 21.4 27.9
FY10 46684.3 10453.0 9829.4 21.1 15.6 38.0 50.5
Q1FY11 11940.3 3106.0 2521.8 21.1 4.0
Company Background
Coal India is the world’s largest coal producing company both in terms of raw coal production (431.3 MT in FY10) and reserves (18.9 billion tonne)…
Coal India Ltd (CIL), established in 1973 as a wholly-owned subsidiary of the Government of India, is the world’s largest coal producing company both in terms of production as well as reserves. The company in FY10 has produced ~445.9 MT of coal. Out of this, ~431.3 MT was raw coal. The company has total reserves of ~18.9 billion tonnes comprising ~10.6 billion tonnes of proved reserve and 8.3 MT of probable reserves. CIL also has huge resources of ~64.2 billion tonnes, which constitutes 51.3 billion tonnes, 9.9 billion tonnes and ~3 billion tonnes measured, indicated and inferred resources, respectively. As of March 31, 2010, CIL operated 471 mines in 21 major coalfields across eight states in India. Out of the total mines operated, the number of open cast mines, underground mines and mixed mines remained 163, 273 and 35, respectively. CIL has 11 direct and indirect subsidiaries in India, out of which nine are engaged in coal production. One of the subsidiaries, viz. Central Mine Planning and Design Institute Ltd (CMPDL) provides technical and consultancy services to CIL as well as third-party clients regarding coal exploration, mining, processing and related activities. CIL along with SAIL, NTPC, NMDC and RINL has set up a joint venture International Coal Venture Ltd (ICVL) to scout for acquisition of coal mines outside India.
Exhibit 2: Corporate structure of Coal India Limited President of India, acting through the ministry of Coal, Government of India
90% (Post-Issue)
Coal India Limited
100%
100%
100%
100%
Central Mine planning & design Institute Ltd *(Rs 457.2 crore)
Eastern Coalfields Limited *(Rs 5829.1 crore)
Northern Coalfields Limited *(Rs 8140.5 crore)
South Eastern Coalfields Limited. *(Rs 10486.6 crore)
100% Western Coalfields Limited *(Rs 6483.4 crore)
100%
100%
Mahanadi Coalfields Limited *(Rs 7481.0 crore)
Central Coalfields Limited *(Rs 7249.6 crore)
60%
70%
MJSJ Coal Ltd.
MNH Shakti Ltd
100%
Bharat Coking Coal Limited *(Rs 6158.4 crore)
100%
Coal India Africana Limited
Source: CIL RHP, ICICIdirect.com Research * Numbers are for FY10
ICICIdirect.com | Equity Research
Page 2
Exhibit 3: Revenue trend 50000
46684.3 40810.8
41000 31542.7
30755.1
16
34608.4
12
0
Revenue
FY10
5000 FY09
4
FY08
14000
FY07
8
FY06
23000
(%)
32000 (Rs crore)
After maintaining stable growth, revenues grew at a faster pace during the past couple of years. Since FY06, till FY10 revenues have grown at a CAGR of 9%…
20
Revenue growth (YoY)
Source: CIL RHP, ICICIdirect.com Research
Exhibit 4: EBITDA and EBITDA margin trend 12000
30
10453.0
10000 8000
25 7439.2
6908.6
20
6257.8
15
4000
3106.0
2614.7
10
EBITDA margin
Q1 FY11
EBITDA
FY10
0 FY09
0 FY08
5
FY07
2000
FY06
(Rs crore)
6000
(%)
The EBITDA margin has improved to 25% in Q1FY11 from 22% in FY10…
Source: CIL RHP, ICICIdirect.com Research
Exhibit 5: Bottomline trend 9829.4
10000 8000
160 120
6000
80 4285.0
4205.3
4062.8
4000
40
2000
0
0
(%)
Since FY06 till FY10, the consolidated PAT grew at a CAGR of ~10%…
(Rs crore)
6113.6
PAT
FY10
FY09
FY08
FY07
FY06
-40
PAT growth (YoY)
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 3
Investment Rationale Market leader with virtually no competitors CIL contributes 80% of the country’s total coal output. Therefore, virtually no competitor exists for the company as far as coal supply is concerned to different industries. Exhibit 6: Share of coal production in India
MEGH 1%
Others 6%
TISCO 2% SCCL 9% CIL 82%
Source: CIL RHP, ICICIdirect.com Research
Growing demand for coal to provide support With the rising demand for coal in India the company is very well positioned as the sole supplier of coal to industries like power, steel, cement, etc. In India, coal is the primary source of fuel for thermal power plants, which consumed 77% of the total coal produced in India during 2009. Exhibit 7: Sector wise demand for coal (million tonnes) in India 10th 5- year plan Sector
11th 5- year plan
2006-07
2007-08
2008-09
2009-10 2010-11E 2011-12 E
Actual supply
Actual supply
Actual Actual supply supply (P)
BE
MTA Revised
Coking coal Steel/Coke ovens & cokeries
17.3
16.99
16.58
17.23
17.92
26.02
Steel (Import)
17.88
22.03
21.08
23.47
32.59
42.48
Sub-total Coking
35.18
39.02
37.66
40.7
50.51
68.5
473
Non-Coking Coal Power utilities (Gen reqd)
307.92
332.4
362.93
371.66
442
Captive Power
28.13
29.31
32.74
39.08
44
47
Cement
19.67
21.27
18.85
18.98
30
33.35
Steel DR
17.47
20.92
19.78
23.09
28.8
28.96
BRK & others
55.51
61.37
77.07
88.82
61
62.43
Sub-total Non-Coking
428.7
465.27
511.37
541.63
605.8
644.74
463.88
504.29
549.03
582.33
656.31
713.24
Grand Total
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 4
Low cost of production Globally, CIL has been one of the least cost producers with cash cost of production of Rs 745/tonne for FY10 and Rs 848/tonne for Q1FY11 for raw coal from open cast mines. Since open cast mines contribute 90% of its total output, the overall cash cost of production has also been considerably cheaper. Exhibit 8: Cash cost (Rs/ tonne) for raw coal from open cast mines 900.0 847.9
850.0 800.0 750.0 CIL has been one of the least cost producers in the world for raw coal from open cast mines…
737.9
745.0
714.8
700.0 650.0
Q1FY11
2010
2009
2008
600.0
Source: CIL RHP, ICICIdirect.com Research
Capacity expansion CIL has been continuously increasing its coal production to address the growing demand in the country. Till March 31, 2010, 77 projects with an aggregate proposed capacity addition of 184.78 mtpa, involving an aggregate proposed capital expenditure of Rs 11,006.46 crore were approved by the CIL board and the board of directors of the relevant subsidiaries for the implementation of these projects. Out of these 77 projects, 32, with an aggregate capacity of 104.00 mtpa, had been implemented by March 31, 2010. They have contributed 57.0 MT towards the production during fiscal 2010. As of March 31, 2010, of the 77 projects, 45 identified projects (comprising 22 capacity expansion projects for existing mines and 23 new mine projects) had received the requisite investment approval. They were in various stages of mine planning and development: a) 25 projects, with an aggregate estimated capacity of 47.51 mtpa, and involving an aggregate estimated capital expenditure of Rs 33,85.71 crore, were at various stages of implementation as of March 31, 2010. They are expected to become operational by the end of fiscal 2012; and b) 20 projects, with an aggregate estimated capacity of 33.27 mtpa and involving an aggregate estimated capital expenditure of Rs 25,76.28 crore, involve longer gestation periods and are expected to become operational during the 12th Five Year Plan (2013-2018) period Exhibit 9: Capex details Period
Capacity addition (MT)
Outlay (in Rs crore)
Mar-10
184.8
11006.5
Mar-12
47.5
3385.7
FY14-17
111.0
2330.0
33.3
2576.3
XII th five year plan (2013-18) Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 5
Scope for price hike CIL’s realisation has been much cheaper compared to its global peers. The company last revised prices for its products in October 2009. With the rising demand the company can justify a price hike. According to the management, it may be considered during July 2011. Exhibit 10: Price realisation (Rs/ tonne) 2500
2267
2000
1045
925
841
811
1747
1582
1480
1346
1500 1000
2238
2134
1890
500 0 2008
2009 Raw Coal
2010
E-Auction Sales
Q1FY11
Beneficiated Coal
Source: CIL RHP, ICICIdirect.com Research
Exhibit 11: Price range of CIL’s different coal grades wef October 16, 2009 Grade
Price range (in Rs/ tonne)
Non coking coal A
1280 to 2580
B
1130 to 2120
C
950 to 1860
D
790 to 1610
E
620 to 1090
F
480 to 870
G
350 to 700
Coking Coal Steel grade-I
3750
Steel grade-II
3140
Washery grade-I
1710 to 2740
Washery grade-II
1410 to 1990
Washery grade-III
1200 to 1480
Washery grade-IV
1120 to 1370
Others (SC-I/II/SLV)
1450 to 2150
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 6
Key concerns
Higher employee costs CIL has been incurring high employee costs (36% of the revenue in FY10) due to large number of employees. The company is expecting some wage revisions during 2011. CIL, however, has been continuously trying to reduce this by deploying workers in unviable mines to new projects.
Exhibit 12: CIL’s employee strength 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0
426077 370975
39081 16021
412350 357858
38475 15092
38868 15624
2008
2009 Executives
444041 390300
397138 343571
2010
Supervisors
Workmen
14968
38773
As on June 30,2010 Total
Source: CIL RHP, ICICIdirect.com Research
Environment/forest/Naxalites related issues
The company’s major operational area falls in the states mostly affected by Naxalites and local mafias. Though the company follows very sound CSR and has a policy to employ displaced people even without suitability, this can be a potential threat as far as carrying out smooth mining operations are concerned. Infrastructure bottlenecks Improper infrastructure, mainly with regard to logistics and transportation, has been a cause for concern for the company aiding a rise in inventory. A majority of CIL’s produce is dispatched through railways and shortage of wagons creates problems.
Exhibit 13: Modes of coal transportation Others 6% MGR 19% Rail 46%
Road 29% Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 7
Valuations At the higher IPO price band of Rs 245, CIL is discounting its FY10 EPS (post issue) and FY10 EV/EBITDA by 15.7x and 11.3x, respectively. On an EV/tonne (reserve) basis, the stock is available at Rs 62.4 on FY10 basis. Exhibit 14: Global peer valuation Company Peabody Enrgy China Shenhua Energy Exxaro resources ltd Bumi resources
ROE (%) P/BV (x) 2010 2011 2012 2010 2011 2012 18.3 23.1 23.3 3.1 2.5 2.0 17.4 17.3 16.2 2.6 2.2 2.0 34.0 34.0 33.0 2.0 2.0 1.6 19.5 23.9 22.8 2.8 2.2 1.9
P/E (x) EV/EBITDA (x) 2010 2011 2012 2010 2011 2012 16.8 11.3 9.5 8.4 6.5 5.6 15.2 13.3 12.2 8.6 7.5 7.1 8.4 6.9 5.7 9.8 7.1 5.6 14.6 9.7 8.8 7.6 5.5 4.7
Source: Bloomberg, ICICIdirect.com Research
Exhibit 15: Resources and reserves: Global peers Company
Market Cap (USD mn)
Resource(mn tonnes)
Reserves(mn tonnes)
13130 69728 6126 4877
9015 14850 14142 7782
6836 5860 1771 2904
Peabody Enrgy China Shenhua Energy Exxaro resources ltd Bumi resources Source: Bloomberg, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 8
Financial Summary
Exhibit 16: Profit and loss account FY07 31542.66
Net Sales % Growth Other Income Stores and spares Employee Exp. Total Exp. % Growth EBDITA Depreciation Interest PBT Tax Net Profit % Growth Equity Face Value Dividend % EPS
3215.20 5726.09 10097.53 24634.08 6908.58 1311.64 84.93 8586.24 2893.73 4205.27 631.64 10 0.36 6.66
FY08 34608.40 9.72% 3764.10 6085.22 12635.16 28350.62 15.09% 6257.78 1529.95 149.93 8190.42 3474.55 4285.00 1.90% 631.64 10 0.40 6.78
FY09 40810.81 17.92% 5119.65 6719.85 19742.09 38196.11 34.73% 2614.70 1662.93 156.50 5738.67 3663.24 4062.81 -5.19% 631.64 10 0.42 6.43
FY10 46684.29 14.39% 5240.84 6231.87 16655.52 36231.27 -5.14% 10453.03 1313.84 136.46 13964.92 4342.48 9829.41 141.94% 631.64 10 0.22 15.56
Source: CIL RHP, ICICIdirect.com Research
Exhibit 17: Balance sheet FY07 6316.36 9896.76 332.71 1811.19 18357.02 10392.54 1237.74 2025.88 3125.01 1682.23 15929.27 7818.44 28554.94 23617.14 4249.72 427.09 18357.02
Share Capital Reserves & Sur. Secured Loans Unsec. Loans Total Liabilities Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash & Bank Loans & Adv. Current Assets CL & Prov. Net Curr. Assets Net Deferred Tax Total Assets
FY08 6316.36 10884.32 224.71 1659.20 19084.59 10438.72 1539.20 1717.90 3407.36 1657.16 20961.48 10266.29 36292.28 30594.46 4751.95 607.69 19084.59
FY09 6316.36 12691.80 180.46 1968.02 21156.65 11008.78 1822.30 1505.18 3666.87 1847.48 29695.01 11727.05 46936.41 39942.33 5768.34 954.83 21156.62
FY10 6316.36 19528.91 466.91 1619.94 27932.13 12030.96 2090.88 1282.14 4401.77 2168.65 39077.76 8676.20 54324.38 41382.48 11440.87 965.76 27932.39
Source: CIL RHP, ICICIdirect.com Research
Exhibit 18: Ratios EPS Cash EPS Book Value EBIDTA Margin (%) Net Profit Margin (%) RONW ROCE Net Debt/Equity Enterprise Value (EV) EV/EBIDTA Sales to Equity Market Cap Market Cap to Sales Price to Book Value
FY07 6.7 8.7 25.7 21.9 13.3 25.9 47.2 -0.9 138939.7 20.1 1.9 154750.9 4.9 9.5
FY08 6.8 9.2 27.2 18.1 12.4 24.9 43.7 -1.1 135673.3 21.7 2.0 154750.9 4.5 9.0
FY09 6.4 9.1 30.1 6.4 10.0 21.4 27.9 -1.4 127204.4 48.6 2.1 154750.9 3.8 8.1
FY10 15.6 17.6 40.9 22.4 21.1 38.0 50.5 -1.4 117760.0 11.3 1.8 154750.9 3.3 6.0
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 9
Annexure 1: Facts about CIL Exhibit 19: CIL’s production of different grades of coal (million tonnes) 500.0
29.1
28.1
329.8
347.0
2006
2007
400.0
39.1
30.2
30.0
363.8
388.5
406.8
2010
200.0
2009
300.0
100.0
2008
0.0 Non coking coal
Coking coal
Source: CIL RHP, ICICIdirect.com Research
Exhibit 20: CIL’s coal production from different mines (million tonnes) 500 400 300
45.82
43.54
43.32
200 297.57
335.92
317.59
43.96
359.77
43.25
388.01
100
9.65 85.5
Underground Mines
Q1FY11
2010
Open Cast mines
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
Exhibit 21: Different types of coal production by CIL (million tonnes) 500 400
15.42
14.12
14.29
360.91
379.46
14.96
14.59
300 200
343.39
403.73
431.26 3.24
100
95.15
Benificiated coal
2010
Q1FY11
Raw Coal
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
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Exhibit 22: Coal sales volume of different grades by CIL (million tonnes) 500 400 300 200
28.1
28.0
320.0
336.5
29.1
359.9
31.2
37.1
384.5
392.8 10.7
100
93.7
Coking Coal
Q1FY11
Non coking coal
2010
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
Exhibit 23: Coal sales volume of different types by CIL (million tonnes) 500 400 300 200
15.4
332.7
14.5
14.2
374.6
350.3
14.9
14.6
400.8
415.2 3.5
100
100.9 2010
Beneficiated Coal
Q1FY11
Raw Coal
2009
2008
2007
2006
0
Source: CIL RHP, ICICIdirect.com Research
Exhibit 24: Calorific value for different grades of CIL’s coal Non-Coking Coal grades
UHV (Kcal/kg)
GCV (Kcal/kg)
> 6200
>6401
B
5600-6200
5800-6401
C
4940-5600
5400-5801
D
4200-4940
4800-5401
E
3360-4200
4200-4801
F
2400-3360
3600-4201
G
1300-2400
3200-3601
Grade A
Source: CIL RHP, ICICIdirect.com Research
Exhibit 25: Moisture and ash content of CIL’s semi coking coal grades Grade I
Ash + moisture content < 19%
Grade II
Ash + moisture content > = 19% < 24%
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 11
Exhibit 26: Ash content of CIL’s coking coal grades Coking Coal grades
Ash content
Steel grade-I
< 15%
Steel grade-I
15%-18%
Washery grade-I
18%-21%
Washery grade-II
21%-24%
Washery grade-III
24%-28%
Washery grade-IV
28%-35%
Source: CIL RHP, ICICIdirect.com Research
Exhibit 27: Reserves and resources of CIL (million tonnes) Coal reserves Coal fields currently under production
As per ISP guidelines
As per JORC code
Total Extractable/Mi geological neable Coal reserves reserves
Total Extractable/Mi geological neable Coal reserves reserves
Korba
5551.4
2670.0
4572.3
Singrauli
3481.7
1891.1
3479.7
2393.4 1890.6
Talcher
10520.7
6297.0
9802.3
5172.1
IB-Valley
3815.5
2506.9
3813.5
2401.8
Wardha valley
2921.0
794.7
2851.3
682.9
Jharia
7042.7
1151.4
7024.0
498.5
North Karanpura
4579.1
2053.6
4578.3
2025.5
Central India Coal fields
3680.3
752.1
3146.1
513.0
Raniganj
9177.4
661.6
9121.4
332.5
Rajmahal
3303.6
545.7
3230.9
545.7
East Bokaro
3225.7
684.1
3214.1
549.0
West Bokaro
1762.9
453.1
1759.0
407.8
937.9
214.3
936.0
146.5
2070.5
659.3
2068.9
654.4
Kamptee Mand-Raigarh Umrer Nand Bander
558.5
214.9
558.5
209.4
1666.5
307.8
1663.7
187.2
Pench Kanhan
936.4
148.7
910.4
52.8
Pathakhera
218.2
87.0
217.9
76.6
Makum
335.1
92.6
333.7
50.5
Ramgarh
405.0
137.7
404.8
58.2
17.5
14.6
17.5
14.6
15.9
0.0
15.9
0.0
0.0
0.0
0.0
0.0
483.7
0.0
478.8
0.0
19.1
0.0
18.9
0.0
66726.4
22338.1
64218.0
18862.9
South Karanpura
Giridih Coalfields currently not under production Daltonganj Hutar Tatapani-Ramkola Dilli-jeypore Total
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 12
Annexure 2: Coal statistics Exhibit 28: India’s coal reserves (million tonnes) Type of Coal
Proved
Indicated
Inferred
Total
Coking Prime Medium
4614.4
698.7
0.0
5313.1
12572.5
11939.9
1880.3
26392.7
Semi
482.2
1003.3
221.7
1707.1
Total
17669.0
13641.9
2102.0
33412.9
Non Coking
91651.5
116922.2
33457.1
242030.8
477.7
89.7
799.5
1366.9
109798.2
130653.7
36358.6
276810.5
Tertiary Total
Source: CIL RHP, ICICIdirect.com Research
Exhibit 29: Performance of coal sector in India (million tonnes) Parameter
FY08 (Actual) FY09 (Actual) FY10 (Actual)
MTA target FY12
Physical performance Coal demand*
492.5
550.0
598.0
Indegenous coal supply
454.5
490.0
514.6
629.9
Coal production
457.0
492.8
532.1
629.9
Coal Imports Coking coal Thermal coal Net gap in demand supply
713.2
49.8
59.0
67.7
83.3
22.0
21.1
23.5
42.5
27.8
37.9
44.3
40.9
-11.8
1.0
15.7
0.0
Source: Annual Plan 2010- 11, MoC, GOI; CIL RHP, ICICIdirect.com Research MTA- Mid- Term Appraisal; *assessed by Planning Commission
Exhibit 30: Global coal production statistics (million tonnes) 2002
2003
2004
2005
2006
2007
2008
2009
China
Country
1454.6
1722.0
1992.3
2205.7
2373.0
2526.0
2803.3
3050.0
USA
992.7
972.3
1008.9
1026.5
1054.8
1040.2
1063.0
973.2
India
358.1
375.4
407.7
428.4
449.2
478.4
515.9
557.6
South Africa
220.2
237.9
243.4
244.4
244.8
247.7
252.6
250.0
Indonesia
103.4
114.3
132.4
152.7
193.8
216.9
229.0
252.5
Russia
255.8
276.7
281.7
298.3
309.9
313.5
328.6
298.1
Australia
340.8
350.4
364.3
375.4
382.2
392.7
397.6
409.2
Others
1127.1
1139.4
1155.0
1159.7
1178.9
1192.7
1203.6
1150.0
Total World
4852.7
5188.4
5585.7
5891.1
6186.6
6408.1
6793.6
6940.6
Source: CIL RHP, ICICIdirect.com Research
ICICIdirect.com | Equity Research
Page 13
RATING RATIONALE
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Head – Research
[email protected]
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