Nothing below this point Subtitle Nothing below this point Development of Coal and Power Sector Harsh Agrawal February 2011 Investor Perspectives

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Large Capacity Additions Planned in Power Generation Capacity Announcements by the Private Sector MW Installed Capacity at March 2010 Source:CEA, Infraline, Company Data, Morgan Stanley Research; e= Morgan Stanley Research estimates Experienced GeneratorsCompanies Associated with the Power SectorCompanies Unrelated to Power Sector / Unawarded Projects Capacity Addition Announcements Between F2011e–17e Potential Installed Capacity at March 2017e Centre State Private Centre State Private Centre State Private += ~81 GW in Additions by FY2015, Led Primarily by Private Sector

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ High Dependence on Domestic Coal to Meet Targets Coal Dominates the Thermal CategorySignificant Capacities Dependant on Domestic Linkages and Coal Blocks Lignite Gas Coal Domestic - Linkage Domestic - Captive Blocks Imported Domestic + Imported Fuel Linkage not tied up Source:CEA, Infraline, Company Data, Morgan Stanley Research % of Total Thermal Capacity Additions between FY 2011E and FY 2017E (118GW of Thermal Capacity)

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Captive Mine Production Till Date CILCaptiveSCCL Captive Mine Production Relative to CIL, SCCL Production Source:Infraline, Company Websites, Industry Sources MnT Production Dominated by CIL, Coal Block Production Needs to Ramp Up to Meet Demand

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Captive Coal Block Status Award DateAllocatedOperational < Total21526 Source:Minutes of Review Meeting held on 20 th and 21 st July 2010 under the Chairmanship of Additional Secretary (Coal) to review progress of captive blocks and associated End Use Projects

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Details of operating blocks Captive Coal Block Status Sl. NoName of Allocattee / JVAllotment yearName of coal blocksNo. of blocksProduction yearTime taken 1CESC Ltd./ICML1993Sarshatali INDAL/ HINDALCO1994Talabira WBSEB/BECML1996Tara (East) WBPDCL/BECML1996Tara (West) BLA Industries1996Gotitoria (E&W) Monnet Ispat Ltd.1996Gare Palma IV/ JSPL Ltd.1996Gare Palma IV/ Steel Authority of India1996Tasra Jindal Power Ltd.1998GarePalma IV/2& Jayaswal Neco Ltd.1999Gare Palma IV/ RASL now SEML2000Gare Palma IV/ PSEB2001Panchwara Central Prakash Industries Ltd.2003Chotia Arunachal PMDCL2003Namchik Namphuk KPCL2003Baranj IV, Kiloni and Manora Deep Usha Martin Ltd.2003Kathautia WBPDCL/BECML2003Barjora Source:Minutes of Review Meeting held on 20th and 21st July 2010 under the Chairmanship of Additional Secretary (Coal) to review progress of captive blocks and associated End Use Projects, Company Websites, Industry Sources

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Issues Faced in Development of Captive Mines Source:KPMG, Infraline, Industry Sources Core Issues faced by Captive Mine Developers Clearance hurdles: Grant of prospecting license, approval of mining plan, land acquisition etc. time-consuming Infrastructure bottlenecks: Blocks in remote areas require development of transport infrastructure at extra cost Land acquisition issues: Availability of land records, tribal and forested land, R&R procedures add to acquisition delays Local issues: 90% of coal reserves in India are in 4 states which have been affected by Naxalism Financing limitations: Uncertainty of cash flows, aggravated by the issues listed above, lead to lender discomfort Coal block allotment Purch ase of geolo gical report Mini ng leas e app licat ion to Stat e Gov t. Mining plan prepar ation and approv al Envir on- ment al cleara nce Forest Clearanc e Land Acquisit ion Producti on 28 months 24 months12-18 months Normative timelines issued by MoC indicate that production may start ~72 months from allotment Potential for substantial delay Of the 24 operational blocks, the time to become operational has ranged from 3 to 9 years

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Analysts Predicting Growing Deficits Over Time Deficit Predictions of 300 – 400 MM Tonnes by FY 2017 Analyst 1 Source:CEA, Infraline, Company Data, Morgan Stanley Research; e = Morgan Stanley Research estimates Projected Thermal Coal deficit; MM Tonnes Analyst 2 Projected Total Coal Deficit; MM Tonnes Source:Credit Suisse Estimates

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ However, Constrained Port Handling Capacity Imported Coal Volumes to be Affected due to Capacity Constraints Majors Ports Running at Very High Utilisation Total Traffic (mtpa)% Source Indian Ports Association Total Coal Handling Capacity Needed at Ports mtpa Source Credit Suisse Estimates

Only Source / Footnotes below this line Subtitle Only Source / Footnotes below this line prototype template ( )\print library_new_final.ppt 2/7/ Increasing Investments and the Way Forward Policy changes to increase coal production – Allowing for coal block auctions – Third party sales from captive blocks Streamlining clearance procedure for coal blocks – Shortening of development timeline critical – Forest and environment clearance obtained before allocation – Land acquisition substantially complete – R&R issues analyzed before allocation Strengthening inland transportation and port handling capacity – Increasing rail capacity and reduction in transportation time – Enhanced port handling capacity