Coal India Limited

Energy Security, Growth & Sustainable Development

“Coal is the main source of energy in the country…..A new Coal Distribution Policy has been put in place…to make coal accessible to all…Coal India has been conferred Navaratna Status1 for speedy project implementation…”

Excerpts of Address by the President of India to the Joint Session of Parliament, 12th February 2009

Introduction

1Navaratna was the title originally given to the nine most prestigious Public Sector Enterprises identified by the GoI, giving them greater autonomy to compete globally. This has been raised to 18, with CIL being the most recent addition 2

Agenda

Coal Sector Overview

Coal India Limited – Company Overview

Sustainable Strategic Initiatives

3

Coal Sector Overview

Asia’s Most Important FuelCoal remains a key source of energy in the world– Provides ~29% of global primary energy needs– Generates ~41% of world’s electricity

Primarily used for power generation and metallurgyCheapest source of energy on a heat adjusted basisLong term secular factors to drive global growth in coal demand– Growth driven by China and India ~50% of

global demand– Global demand driven by steel and power

industries and higher cost of competing fuels – Asian growth driven primarily by power

generation needsInfrastructure bottlenecks and regulatory constraints restricting supply

Energy Consumption1 (2008)

Oil34.8%

Coal29.2%

Natural Gas

24.1%

Hydro electric6.4%

Nuclear Energy5.5%

World 11,295 Mtoe

Asia 3,982 Mtoe

Coal51.0%Oil

29.7%

Natural Gas

11.0%

Hydro electric5.3%

Nuclear Energy3.0%

Source: BP World Energy Report 20091Mtoe = Million tonnes of oil equivalent = 1.5 metric tonnes of hard coal 5

Coking6.8%

Non Coking93.2%

Coal Industry in IndiaTotal resources– ~267bn tonnes: 106bn proved,

161bn indicated/inferred88% of production from opencast mines; 12% from underground minesCoal present in 14 out of 28 statesIndian coal is generally high ash, ~4500 GCV, low sulfurNo longer a regulated industry

Coal Production and Imports Types of Coal Produced in India

Coal Reserves in India

India

ChinaPakistan

Myanmar

Nepal Bhutan

Sri Lanka

Coalfields

India

ChinaPakistan

Myanmar

Nepal Bhutan

Sri Lanka

Coalfields

323.5 343.4 360.9 379.5 403.759.1

63.6 69.977.6

89.329.0

38.643.1

49.859.0

411.6445.6

473.9506.9

552.0

200

300

400

500

600

2004-05 2005-06 2006-07 2007-08 2008-09

Coa

l Pro

duct

ion

/ Im

port

s (M

T)

CIL Others Imports

6

Indian Coal Industry in Context

Annual Electricity Consumption per Capita

Source: International Energy Outlook, Planning Commission, BP World Energy Report 2009

Annual Per Capita Electricity Consumption Growth in India (units per capita)

Global Coal Reserves by Country

Global Coal Production by Country

238

157

115 10676

34 31 30

0

50

100

150

200

250

300

US

A

Rus

sia

Chi

na

Indi

a

Aus

tralia

Ukr

aine

Kaz

akhs

tan

Sou

thA

frica

Bill

ion

Tonn

es

504

631

2,024

2,444

7,493

10,347

13,515

Indonesia

India

Brazil

China

France

Australia

US (2007)

(2007)

(2007)

(2007)

(2007)

(2006)

(2007)

1,455

993 1,063

358512

342 402256 327220 250

2,782

0

500

1,000

1,500

2,000

2,500

3,000

2002 2008

Mill

ion

Tonn

es /

year

China USA India Australia Russia South Africa18

35

84

131

238

408

582

631

1,000

1950

1960

1970

1980

1990

2001

2004

2006

2012

Estimated 58% Growth in

XIth Plan

7

Company Overview

1

2

4

5

7

9

10

83

6

Vast Scale and OperationsLargest coal company in the world

– Produced over 403mn tonnes in FYE Mar 2009

– 82% market share in India– Over 400,000 employees

Access to vast untapped coal reserves – Reserve base ~ 70bn tonnes

CIL alone meets 45% of India’s primary commercial energy requirementNet Revenues of over $8bnEstimated PBT before pay revision ~$2.3bn, PBT as reported ~$1.2bn for FYE March 2009100% owned by the Government of India (GoI)Awarded Mini-Ratna in Mar ’ 2007, Nav-Ratna in Oct ’ 2008 & SCOPE Excellence Award in 2009

Coal India Limited Subsidiaries

Planning & Design InstitutePlanning & Design Institute

Central Mine Planning & Central Mine Planning & Design Institute (CMPDIL)Design Institute (CMPDIL)

1

2

3

4

5

6

7

8

9

10

Eastern Coalfields Ltd. (ECL)Eastern Coalfields Ltd. (ECL)

Bharat Coking Coal Ltd. (BCCL)Bharat Coking Coal Ltd. (BCCL)

Central Coalfields Ltd. (CCL)Central Coalfields Ltd. (CCL)

Northern Coalfields Ltd. (NCL)Northern Coalfields Ltd. (NCL)

Western Coalfields Ltd. (WCL)Western Coalfields Ltd. (WCL)

South Eastern Coalfields Ltd. South Eastern Coalfields Ltd. (SECL)(SECL)

Mahanadi Coalfields Ltd. (MCL)Mahanadi Coalfields Ltd. (MCL)

North Eastern Coalfields (NEC)North Eastern Coalfields (NEC)(A Unit Under CIL (HQ))(A Unit Under CIL (HQ))

Coal India Limited Coal India Limited SubsidiariesSubsidiaries

Singareni Collieries Co. Ltd. Singareni Collieries Co. Ltd. (SCCL)(SCCL)

Neyveli Lignite Corporation Neyveli Lignite Corporation (NLC(NLC))

Exchange rate of 48.39 INR/USD9

Completing a Major Transformation

Sector grew <2%Low returnsLow investments“Born Sick”

COAL AT ANY COST

NationalisationMassive public investmentAchieved target growth of 5% CAGRBalance sheet weakness

1975 1991 1997 2002 2007 and Beyond

CONSOLIDATION

Consolidated financial positionSlow growth in demandForeign funding

TAKE OFF

Plans to grow to 520.5MT of annual production by 2012International growth plans by acquiring coal fields abroad

Phase out budgetary supportEnforcing financial disciplineProfitable from 1991/1992Accessed financial markets

Highest production growth – 5.2 % CAGR over IXth planImprovement in capacity utilisationReduced manpower by over 81,000Improved productivity by 37 %Funded investment from internal resourcesDebt/Total capital reduced from 60 to 10%

PRE-NATIONALISATION PRAGMATISM LAUNCHING PAD

10

Presence Through the Value Chain

EXPLORATION

COAL MINING

BENEFICIATION

473 mines owned:– 279 UG – 163 OC – 31 Mixed

Production in 2008-09 was 359MT from OC and 44MT from UGSCCL and TISCO are the other main players in coal mining~200 blocks allotted to private operators for captive mining

Operates 17 washeries (11 coking and 6 non–coking) Decision taken to supply beneficiated coal to all consumers, other than those located at pitheads19 new washeries (105.6MTy total capacity) being taken up for construction as a Public-Private-Partnership (PPP) initiative

Carried out in two stages: Regional and DetailedIn 2008-09, 0.27mn meters of drilling has been achievedAction initiated to enhance drilling capacity to 1mn meters annually

11

Strong Track Record of Growth

Leads to Growth in Net Revenues… ... And Growth in Profitability

Growth in Coal Production… … While Improving Productivity1

1 OMS: Output per man shift is obtained by dividing output of saleable coal obtained by total number of man-shifts worked2 08-09 PBT numbers reflect add back of one time charges of ~$1.1bn related to the most recent wage revision act. This includes ~$0.6 in charges related to pension liability, ~$0.2 in charges related to 06-07, ~$0.3 in charges related to 07-08Exchange rate of 48.39 INR/USD

587562

542520

501485 468 452 439 426 412

375

425

475

525

575

625

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

Man

pow

er (0

00's

)

0.0

1.0

2.0

3.0

4.0

5.0 Output per M

anshift

Manpower (000's of employees) OMS (Tonnes/Manshift)

$ 0.7$ 1.1 $ 1.0

$ 1.8 $ 1.8$ 1.2

$ 1.8

17%

30%29%

26%28%

19%

24%

0.0

1.0

2.0

3.0

4.0

02-03 03-04 04-05 05-06 06-07 07-08 08-09

PBT

($ b

n)

10%

15%

20%

25%

30%

35%PBT Margin %

$2.32

280291

306324

343361

380404

250270290310330350370390410430

01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

Coa

l Pro

duct

ion

(MTy

)

CAGR: 5%

CAGR: 6%

$4.2 $4.6$5.4

$6.0 $6.2$6.8

$8.1

0

2

4

6

8

10

02-03 03-04 04-05 05-06 06-07 07-08 08-09

Net

Rev

enue

s ($

bn) CAGR: 11%

12

Average Annual Net Cash Flow from CIL to GoI

Strong Cash Generation

Exchange rate of 48.39 INR/USD 13

Unmatched Strategic Relevance The Indian economy is expected to grow at 7.5% p.a. over the next 5 years

– Access to electricity is a core element to achieving this growthEnergy demand is growing at 7% per year in India – GoI has planned for an additional 79 GW1 to be build in the current 5-year plan –

of which 72% will be coal-fired– Over 50% of Indians currently do not have access to electricity

CIL meets 45% of country’s primary commercial energy requirements– Coal contributes ~54% of commercial energy in India– CIL provides fuel for 76 out of 78 operational coal-based thermal power stations

in India

Growth in GW in IndiaCoal Consumption as % of Energy

Consumption in India2

Coal53%Oil

31%

Natural Gas9%

Hydro Electric6% Nuclear Energy

1%

Total = 433.3 Mtoe

Source: External Research, Ministry of Coal, Planning Commission of India1Excludes Wind and Renewable Energy2Mtoe = Million tonnes of oil equivalent = 1.5 metric tonnes of hard coal

69 85 105132

211

050

100150200250

1992 1997 2002 2007 2012EInst

alle

d C

apac

ity (G

W)

CAGR: 6%

14

Sustainable Strategic Initiatives

Key Strategic Initiatives

Enhancing Availability of Resources

Ensuring Accessibility of Resources

Increasing Acceptability of Mining Practices

Improving Profitability and Efficiency

Key Initiatives Targeting

Sustainable Development

Growth

Profitability

Efficiency

16

Enhancing Availability of Resources

EXPLORATION

Drilling targets increased 4x— Aiming to convert ‘inferred’ and ‘indicated’ category of

reserves to ‘proved’ categoryDetailed drilling and projectisation of coal blocks allocated tocaptive block owners being carried outSystematic exploration being carried out in order to arrive at reliable estimate of coal reservesApplication of information technology to create geo database

NEW PROJECTS

FOREIGN ACQUISITIONS

Process of acquiring coal resources abroad through equity stake in working or green field projects

— Acquired 2 virgin coal blocks in Mozambique Global Expression of Interest (EoI) floated for selection of strategic partners for overseas operations

134 new projects for ultimate capacity of 309 MTy identified— 34 UG and 100 OC

Setting up 19 washeries with a capacity of 105.6 MTy

17

Ensuring Accessibility of Resources

OPENCAST MINING

UNDERGROUND MINING

Computer-aided mine planning for deeper OC minesDeploying high capacity equipment to achieve economies of scaleOITDS1 for efficient fleet managementState-of-the-Art mass production technology being used

Tapping large reserves below 300m depth7 UG Greenfield properties being developed 18 abandoned mines with estimated reserves over 1600 MT identified for development

HIGHWALL MININGMining of good quality thin seamsRecovery of good quality coal in OC mines beyond economic stripping ratio limit

CBM/UCG

Recovery and commercial utilization of CBM from deep seated seamsUnderground coal gasification of deep seated seams

1 OITDS: Operator Independent Truck Dispatch System 18

Improving Profitability and Efficiency

Economic

Organization

Ensuring competitive delivered energy cost vis a vis imported coalStrategic cost reduction across operation value chainReviving non-performing/loss making unitsMoving progressively to market driven pricing

Improving corporate governance metricsIntroduction of ‘Integrity Pact’ and transparency initiativesWeb based business process via e-auction, e-procurement introduced for speeding up purchase of vital inputs

19

Increasing Acceptability of Mining Practices

SOCIAL

“Mining with a human face” through socially sustainable inclusive developmentInclusive model of all-round growth for Project Affected Peoples (PAPs) Providing employment and cash compensation to land losers

Setting up 19 washeries with a capacity of 105.6 MTyStarted satellite surveillance for land reclamation and restoration of OC minesPlanted ~70mn trees with survival rate of over 75%

ENVIRONMENTAL

Plantations and Greenery over OB Dumps1

1 Left Picture: Plantation over OB Dump, MCL. Right Picture: Greeneries over OB Dump, Umrer, WCL

Highest priority given to safetyFramed distinct ‘Safety Policy’ in every subsidiaryFormed multidisciplinary ‘Internal Safety Organization’ (ISO) in every subsidiary

SAFETY

20

Land Use/Cover Map of Jayant OCP, NCL

2007 2008

Satellite Surveillance

21

Outlook

Potential upside from coal price converging to international prices post washing in future

Scope for further reduction in manpower despite projected growth in coal production

Demand unlikely to constrain production growth in the foreseeable future

Coal Production in India

Coal Consumption / Demand in India

265 335533

835

105

92

185

352465

732

1,125

69

303857

130

0

300

600

900

1,200

IX Plan(97-02)

X Plan(02-07)

XI Plan(07-12)

XII Plan(12-17)

Ave

rage

Ann

ual

Con

sum

ptio

n/D

eman

d (M

T)

Power Steel Others

Actual Consumption Forecasted Demand

280361

521

664

31 38 41 4517 32120

346

0100200300400500600700

IX Plan(97-02)

X Plan(02-07)

XI Plan(07-12)

XII Plan(12-17)

Ann

ual A

vera

geC

oal P

rodu

ctio

n (M

T)

CIL S.C.C.LTD Others

Actual Production Forecasted Production

22

Thank You!