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1 inum Banking Cement Cotton & Cotton Ya Construction Educat Chlor-Alkali CRAMS Crude Oil Gems & J Natural Gas Pesticides Power Generation Steel Pa anganese Ore Pharmaceutical Refining & Marketing ight Transport Commercial Vehicle omponent Business Process Management (BPM) arel oal Shipping Sugar Tractor Telecom Tower Natural Gas Telecom-Wireless Pipe Two Whee Crude Oil Seed Energy SourcesPaper Housing Finance Passenger Vehicl Hospital Roads & Highways Zinc & L Shipbuilding Aluminum nking Express Service Steel Two Wheeler Pesticide Gems & Jewellery Express Service Cr Passenger Vehicle CRAMS yre Two Wheeler ade Fibre otel ads Freight Transport ed January 2014 Reta Cotton & Cotton Yarn Tracto Natural Gas

2 India (CIL) has finally shifted to internationally recognised United Nations Framework Classification (UNFC) as suggested in our last annual report to accurately estimate extractable reserves. UNFC lays down a standard procedure for calculating size reserves and resources based on three dimension system with technical feasibility, economic viability and geological estimate. However, CARE Research believes that the definition extractable coal reserves still remains incomplete even after CIL's downgrade reserves by 16% to 18.2BT in Nov-13. CIL aligns to UNFC framework; but 'extractable reserves' definition still incomplete coal production to reach 690MT/730MT in Base case/best Case by FY17E CARE Research expects coal production to reach 690MT for the Base case scenario implying a 5.5% CAGR from FY14-FY17E. growth in coal production would be contributed by CIL (expected to reach 564MT implying 5.7% CAGR during FY14-FY17E) and 7.0% production CAGR from the captive mines (68.7MT in FY17E). CARE Research's production estimates from the captive mines take into account incremental production ramp-up from NTPC captive mines (Pakri-Barwadih) and Reliance Power's Sasan UMPP mines. For CIL, CARE Research expects none three major railway lines to become fully operational by FY17E given the muted capex incurred by CIL and railways till date and pending environment clearances for these lines. Over the past one year, various policy measures like coal price pooling, coal banking, etc. have been proposed in order to tide over the coal deficit in the country. However, there have been frequent policy announcements, quick revisions and prolonged dialogues between the ministries leading to a situation policy flip flops after which certain measures like coal pooling have been put in cold storage. Additionally, there was unacceptability above mentioned measures by the various stakeholders (state government, end use consumers like power, sponge iron & steel). MoC is also toying with an idea banking, which is a transient arrangement to efficiently use surplus captive coal and reduce coal imports. However, at present CIL is reluctant to be a part this arrangement due to its inability to give back the banked coal. Policy flip-flop remains a dampener for the coal sector imports to reach 188/168MT under both Base/Best case scenarios by FY17E India's coal imports are expected to reach ~188MT/168MT under the Base/Best case by FY17E. This would be driven by steadily increasing thermal coal imports in the Base Case (i.e. 188MT by FY17E) and coal imports peaking at 171MT in the Best Case in FY16E. However, CARE Research estimates the coal imports to decline to ~168MT in FY17E due to increased coal dispatch by CIL and higher production from captive coal mines by 12th Plan-end (FY17E) under the Best case. Till date, 218 captive coal blocks (GR ~49.3BT) having been allocated, which 47 coal blocks (GR ~6.7BT) have been de-allocated. A majority these coal blocks belong to critical sectors like power, sponge iron, steel and cement. While non-production coal from these blocks (mainly due to delay in EC/FC clearances) was cited as reason to deallocate these blocks, CARE Research believes that de-allocation coal blocks is likely to hurt domestic coal production in the long run. Captive coal blocks de-allocation, capex recovery to remain illusive

3 CIL aligns to UNFC framework Table Section- I CARE Research's Outlook coal production to reach 690/730MT in Base/Best case by FY17E demand/supply to grow 5.4/5.9% CAGR in the Base/Best case by FY17E Policy flip-flop remains a dampener for the coal sector imports to reach 188/168MT under Base/Best case by FY17E Captive coal block allocation, capex recovery to remain illusive PPP in coal mining in fing Introduction Types coal industry structure Analysis coal resources in india UNFC framework for classification coal Uses coal Mining Methods Opencast or Surface Mining Underground or Deep Mining Mining technologies in vogue Regulatory Evolution Existing Acts and Policies for Mines Mines Act, 1952 Section- II Section Mines Nationalization Act, 1973 and its Amendment, 1993 Bearing Areas (Acquisition & Development) Act, 1957 Mines and Minerals Development and Regulation Act (MMDR), 1957 Environment (Protection) Act, 1986 Forest Rights Act (FRA), 2006 New Distribution Policy (NCDP), 2007 and its amendments National Rehabilitation & Resettlement Policy, 2007 Policy for captive mining coal blocks Captive coal block allocation Competitive bidding for coal blocks Proposed Regulatory Authority Bill, 2013 Global Dynamics Global coal reserves and resources Global coal demand and production Global coal trade Global coal indices - Dominating Fuel In India's Energy-mix Domestic coal reserves Quality coal, type and category-wise resources

4 Extractible reserves Demand by user segments - consumer-wise f take trend Steel sector Power sector Cement sector Captive power (CPP) sector Sponge iron Other segments Imports and Linkages Indonesia Australia South Africa Transportation - Constraints For Dispatch Port capacity Rail capacity Capacity for transportation coal at Railway Sidings Inland waterways Supply Contracts Fuel Supply Agreements (FSAs) FSAs with Customers in Power Utilities FSAs with Customers in Non-Power Industries (including Captive Power Plants) FSAs with State Nominated Agencies What is tapering Linkage? Proposals to bridge demand supply mismatch Pricing and E- Auction Market pricing in India E-Auction market Buyers in e-auction market Washeries Quality Issues and Beneficiation Washing Coking coal Non Coking coal Existing and proposed washeries Existing and New Washing Technologies Captive - Why Policy Did Not Work? Procedure for Allocation Why Captive Policy did not work? Surplus coal policy/coal banking Table Clean Technologies Scope In Context Bed Methane (CBM) Mine Methane (CMM) Gasification and Underground Gasification (UCG) to Liquefaction or to Liquids (CTL)

5 Table Lignite Importance Lignite in Energy Security Lignite Resources in India Development Lignite in various plans Lignite Production Lignite Demand Demand-supply gap and 12th Plan investments Annexure India Limited SECTION- III Company Section Singareni Collieries Company Limited Neyveli Lignite Corporation Limited Extractable reserves definition still remains elusive for CIL production scenario- Base case production scenario- Best case Subsidiary-wise coal requirement during FY10-FY15E Base case -demand-supply scenario Best case-demand-supply scenario import trend Base case import trend Best case Sector-wise allocation/de-allocation status captive coal blocks Introduction formation process Types List Graphs and Tables SECTION- I CARE Research's Outlook SECTION- II Section coal industry structure Typical proximate analysis various coals (%) Typical ultimate analysis coal (%) resources (BT) (as on 1st April 2013) Coking coal resources (BT) (as on 1st April 2013) Geological and Lignite Resource map India as on 1st April 2013 (in BT) Depth-wise and category-wise break-up coal resources UNFC framework for classification for coal Mining Methods Open Cast Mining in India Continuous mining/ Room and Pillar Mining Longwall Mining

6 Regulatory Evolution Procedure for obtaining forest clearance Global Dynamics Table : Proven Reserves for major countries at CY12 end Global coal demand trend Global coal production trend Top Six Exporters Top Six Importers Global coal prices Dominating Fuel in India's Energy-mix UNFC framework adoption timeline by CMPDIL Reserves as on 01/04/2013 (MT) State-wise Total Reserves as on 01/04/2013 (MT) 12th Plan Coking Demand 12th Plan Demand from Cement Sector 12th Plan Demand from Captive Power Projects (CPP) 12th Plan Demand from Sponge Iron Players Year-wise 12th Plan Demand from "Other Segment incl. E-auction" Imports and Linkages Resource Map Indonesia Indonesian Proven Recoverable Reserves (as on end 2011) Quality Reserves in Indonesia production in Indonesia grew at 12% CAGR from CY07 to CY12 Export continue to grow at 13.3% CAGR for the same period Distance and time taken to travel between ports in Indonesia and India Australian proven coal reserves (in MT) Australian basin-wise coal reserves (EDR)(BT) Australian total identified coal reserves (BT) Year-wise Australian Production (MT) and YoY growth (%) Distance and time taken to travel between ports in Australia and India Year-wise South Africa coal Production (MT) and YoY growth (%) Distance and time taken to travel between RBCT and ports Transportation - Constraints For Dispatch Port-wise handling capacity Upcoming CIL mines linked to important rail projects DFC Eastern corridor DFCC Layout map DFC Eastern Corridor Project Phasing National Waterway 5 National Waterway 1 National Waterways map India Upcoming mines linked to important rail projects Supply Contracts Fuel Supply Agreement (FSA) conditions for Power customers Fuel Supply Agreement (FSA) conditions for Non-Power customers

7 Table Pricing and E- Auction Market Revision coal prices by CIL Revision coal prices by SCCL India prices CIL E-auction f take and Realisation (per tonne) Washeries Company-wise Washed Coking Production Company-wise Washed Non-Coking Production Existing coking coal washeries Existing non-coking coal washeries CIL's proposed Washeries Existing and proposed washery technologies Captive - Why Policy Did Not Work? Sector-wise allocation coal blocks for captive mining Captive coal block production trend List captive coal blocks with possible potential for coal banking Clean Technologies Scope In Context Chronology CBM development in India Lignite State wise lignite resources as on 01st April, 2013 (MT) Tamil Nadu and Rajasthan accounts for more than 90% lignite reserves in the country Depth-wise and State-wise Lignite Resources (MT) Lignite production growth over various five year plans Lignite yearly production for 11th & 12th Plans Year-wise Lignite Capacity Addition for 11th & 12th Plan Year-wise 12th Plan Lignite demand-supply scenario (NLC SECTION- III Company Section India UG coal production mix continues to reduce BCCL is the fastest growing, having grown at a CAGR 5.2% from FY08-FY13 Rail is the biggest transportation mode, while road continues to rapidly grow Share rail transport in coal has proportionately come down Stripping ratio trends Output Per Manshift (OMS) trends open cast Projects completed during FY10-11, FY12 & FY13 Sanctioned projects CIL financials and key ratios (Rs. mn) Singareni Collieries Company Ltd. District-wise reserves Godavari Valley field (as on ) SCCL's UG production have stagnated since FY08 Railways and road to remain mainstay SCCL's coal transportation transportation mix mode-wise (%)

8 Neyveli Lignite Limited Total lignite capacity and production (MT) Mine-wise lignite production (MT) Mining linkage with Power plants NLC's rmal Power Stations Projects under execution Projects under development NLC financials and key ratios (Rs. mn) Table

9 Credit Analysis & Research Ltd. (CARE), promoted in 1993 by some the leading banks and financial institutions including Industrial Development Bank India (IDBI), Canara Bank and others is amongst the premier credit rating agencies in India and provides credit rating, research and information services. CARE Ratings is well equipped to rate all types debt instruments including Commercial Papers, Fixed Deposits, Bonds, Debentures, Hybrid Instruments, Preference Shares, Loans, Structured Obligations, Asset Backed Securities, Residential Mortgage Backed Securities etc. CARE's rating methodologies are in line with the best international practices. CARE Research & Information Services (CARE Research)is an independent division CARE. CARE Research services a variety business research needs with credible, high-quality research and analysis on various facets the Economy and Industries. Publications include Reports, Debt Market Review, Budget Analysis and other policy impact analysis and special commentaries on topical issues. CARE Research fers research reports on various industries. reports by CARE Research provide insightful data and analysis on various industry sectors and CARE's outlook on the same. To view list industries under our coverage you can visit For any queries regarding the content & scope the report kindly reach us at careresearch@careratings.com To place an order, please contact: Manish Sukhija Business Development - CARE Research Credit Analysis & Research Ltd. 503, Kaledonia, Sahar Road, Off Western Express Highway, Andheri (E), Mumbai Cell: , Tel.: (Direct), (Board) CORPORATE OFFICE MUMBAI Credit Analysis & Research Ltd. 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai Tel: , Fax: , care@careratings.com 503, Kaledonia, Sahar Road, Off Western Express Highway, Andheri (E), Mumbai Tel.: ; Fax: REGIONAL OFFICES AHMEDABAD 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad Tel: Fax: BENGALURU Unit No , 11th Floor, Prestige Meridian II, No.30, M. G. Road, Bangalore Tel: , Telefax: CHANDIGARH 2nd Floor, S.C.O , Sector 34-A, Chandigarh Tel: / 09 CHENNAI Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai Tel : / Fax: HYDERABAD 401, Ashoka Scintilla, , Himayat Nagar, Hyderabad Tel: Fax: JAIPUR 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road,Near Collectorate Circle, Bani Park, Jaipur Tel: / 14 KOLKATA 3rd Floor, Prasad Chambers, (Shagun Mall Building), 10A, Shakespeare Sarani, Kolkata Tel: / 02 Fax: NEW DELHI 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi Tel: , Fax: PUNE 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune Tel: MALDIVES 4th Floor, CHAMPA Center Point, Chandhanee Magu, Male' Republic Maldives. Tel: / Mobile: / Fax: CIN: L67190MH1993PLC071691