INDIAN COAL MARKETS CONFERENCE Presentation points by Anand Narayanan CEO HQCP Energy Services

Coal Demand  Domestic Demand for Imported Coal will grow steadily and then rapidly in 2-3 years. Since end use projects and manufacturing may be commissioned much earlier than The domestic Coal mining projects or renewable energy quantum growth in installed capacity.

 The consolidation in Indian power sector especially takeover of marginal projects & players by the professional giants will kick start the implementation.  Large Scale Investment in Overseas Assets a Must to ensure coal supply over long term rather than depend on coal imposts. Often acquisition of a number of small assets is easier and more productive.

 PVT Indian companies have been by & large successful in setting up large trading operations for coal import to India. Adani Group is a prime example of a global level success story in integrated trading including logistics, storage & distribution  Indian companies have however not been very successful in acquisition of coal assets internationally. While there have been odd successes stories many investments have landed in troubled waters and many others have not taken off.

 Some Factors – a) Proper local partnerships, Human Resources & Integration b) Insufficient investment in Infrastructure Development c) Impatience & a hurry to cull returns d) Improper exit strategy e) Regulatory & Legal Factors

 Technology Development – Briquetting & moisture removal in Indonesian coal, beneficiation in African coal  Development of Infrastructure in Destination Countries – Storage, Rail/Road, Ports etc.  Innovative business development like SWAP deals for coal.

 Domestic management of Imports – Transport (problems already discussed & only solutions need implementation), Blending Depots & Stations.  Large investments in International shipping to keep freight competitive.

 International Coal prices are probably in the range of the bottom 15% of what they may be over next 10 years.Freight may also be in the bottom 30% of expected rates over 5-10 years. There is oversupply today and overall global economy dictates have made investments attractive.  It would be wise to secure supplies today as the chances are of prices rising & supply tightening. Currently various markets which did not exist earlier have opened up.