A PROJECT REPORT ON CIL-IPO ANALYSIS

CENTRAL COALFIELDS LIMITED

BY ANKITA SHARMA

SINHGAD INSTITUTE OF MANAGEMENT PUNE

The foregoing

DECLARATION CERTIFICATE This is to certify that the work presented in the project entitled CIL-IPO ANALYSIS in partial fulfillment of the requirement for the award of degree of Master In Business Administration of IEC College Of Engineering & Technology Greater Noida Center is an authentic work carried out under my supervision and guidance. To the best of knowledge, the content of this thesis does not from a basis for the award of any previous degree to anyone else.

ANKITA SHARMA

ACKNOWLEDGEMENT

I WOULD LIKE TO EXPRESS MY SINCERE GRATITUDE TO HUMAN RESOURCE DEPARTMENT OF CENTRAL COALFIELD LIMITED FOR PROVIDING ME AN OPPORTUNITY TO UNDERGO SUMMER TRAINING IN HR SECTOR. I EXPRESS MY SPECIAL THANKS TO MR. G.D PUROHIT, FOR GIVING ME THIS OPPORTUNITY TO ENRICH MY KNOWLEDGE IN THE HR FIELD. I WOULD ALSO LIKE TO THANKS MY GUIDE MR. A.D WADHWA FOR HELPING ME BY PROVIDING HIS VALUABLE GUIDANCE. I WOULD ALSO LIKE TO THANKS ALL THE STAFF MEMBERS OF CCL, MY FAMILY AND FRENDS WHO HELPED ME DIRECTLY AND INDIRECTLY FOR COMPLETION OF THIS PROJECT.

THANK YOU ANKITA SHARMA

COAL INDIA Ltd (CIL) Coal India is the main source of energy in the country; Coal India has been conferred Navratna status for speedy project implementation in 2008 by prime minister in India. CIL is a maharatna company is the single largest coal producing company in the world. CoalIndia is the single largest coal producing company in the world. So CoalIndia is the largest corporate employees in the world. Currently it has 4.15 lakh employees. Its turnover was Rs.50, 233 cr in 2010-2011 with gross profit of Rs.16, 463 crores. Coal India ltd mainly produces coking and non-coking coal. 74% of total coal production of CIL caters to 72 thermal power stations out of 75 of the country generating 64,285 mw. Coal India ltd. is registered under The CompaniesAct, 1956 on 14thJune, 1973. Ministry of corporate affair looks over all the subsidiaries companies. India has 1, 60,000 mw power generation capacity out of which70% to75% is produced using coal, 20% through hydro & remaining through solar, nuclear etc. Coal India ltd. enjoys the power of monopoly. It is only company to produces & sales 83% of total coal & the remaining production which is 17% by the other company for self uses.

Company profile
In order to provide for a higher growth in coal sector to meet the growing energy needs of the country, the Government in 1973, nationalized the coal mines by enacting the Coal Nationalization Act. Pursuant to the nationalization of coal mines, the Company was incorporated as a private limited company with the name of 'Coal Mines Authority Limited', under the Companies Act 1956 on June14, 1973, and in terms of notification no. G.S.R. 345(F) dated July 9, 1973, issued pursuant to the provisions of Section 5 of the Coal Nationalization Act certain nationalized coal mines were vested in our Company by the Central Government. Thereafter in 1975, Department of Coal, Ministry of Energy, Government of India (GoI), with a view to integrate and streamline the structural set up in a manner which could be conducive to a more efficient administration, issued letter no. 38011/1/1/74-CAF dated September 27, 1975, providing for the re-organization of 'Coal Mines Authority Limited' as 'Coal India Limited', which was to be responsible for the entire coal mining sector owned and controlled by the Central Government. Pursuant to the nationalization of coal mines and during the period up to 1991, the Company was able to enhance the growth rate of coal production from a CAGR

of 2.18% at the time of nationalization in Fiscal 1974 to a CAGR of 5.63% by Fiscal 1991. However, during this period, due to certain macro-economic and socio economic factors, the Company continued to operate certain legacy mines inherited pursuant to the nationalization and to operate certain new projects irrespective of financial viability. Further, on account of certain internal reasons and policy issues, the Company's accumulated losses in Fiscal 1991 and overdue liabilities to the Government in Fiscal 1993, reached Rs. 24,989.80 million and Rs. 23,113.10 million respectively. Thereafter, post 1991 upon the Company achieving certain milestones and certain policy changes initiated by the Government the Company endeavored to consolidate its financial position.

Coal India Limited (CIL) has its Headquarters in Kolkata, West Bengal.
The company produces non-coking coal and coking coal of various grades for diverse applications. As of March 31, 2010, the company operated 471 mines in 21 major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed mines (includes both open cast and underground mines). The company also operated 17 coal beneficiation facilities with an aggregate designed feedstock capacity of 39.40 million tons per annum. They intend to develop an additional 20 coal beneficiation facilities with an aggregate additional proposed feedstock capacity of 111.10 million tons per

annum. Besides this, CIL provided 85 hospitals and 424dispensaries.

The Indian Institute of Coal Management (IICM) operates under CIL and imparts multi-disciplinary management development programs executives. Coal India's major consumers are the power and steel sectors. Others include cement, fertilizer, brick kilns etc.

Mission of Coal India Limited

The Mission of Coal India Limited is to produce the planned quantity of coal, efficiently and economically with due regard to safety, conservation and quality.

VISSION
To form the position of domestic leader to leady global player in the energy sector by adopting best practices for mine to market with due care to environmental and societal substances.

Corporate structure: HAS ITS HEAD QUARTER IN KOLKATA, WEST BENGAL.

Company has nine direct Subsidiaries and two indirect Subsidiaries as listed below: 1. Direct Subsidiaries: Indian. A. Bharat Cocking Coal Limited; B. Central Coalfields Limited; C .Central Mine Planning and Design Institute Limited;

D. Eastern Coalfields Limited; E. Mahanadi Coalfields Limited; F. Northern Coalfields Limited; G. South Eastern Coalfields Limited; H. Western Coalfields Limited.

2. Direct Subsidiaries: International A. Coal India Africana Limitada.

3. Indirect Subsidiaries (held through our subsidiary, Mahanadi Coalfields Limited) A.MJSJ Coal Limited; and B.MNH Shakti Limited.

Industrial Profile
The Indian coal industry is the world third largest in terms of production and fourth largest in terms of reserves. Around 70% to 75% of the total production is used for electricity generation. Like state electricity board, NTPC, private (ROJA THERMAL POWER STATION) and the remaining by the SAIL, RINL (Vishakhapatnam) cement and other heavy industries. Coal is also used as fuel for domestic purposes. The first coal mining operation commenced in 1774 in the Raniganj coalfield on the banks of River Damodar. The introduction of steam locomotives and WW-I stimulated demand for coal, and production peaked at 18 million tons (mts) during the 1920s. Till independence, the Indian coal industry witnessed sporadic phases of growth. Since the private sector followed unscientific methods, productivity was low. The Indian government took steps to correct this and

improve the working conditions in the national coal industry. National Coal Development Corporation (NCDC), comprising of railway owned collieries, was established in the early 1970s, all privately owned coal producing companies were nationalized under the Coal Mines (Nationalization) Act. India Coal Industry: Major Players The leading players of the Indian coal industry include: 1. Coal India Limited: A public sector undertaking with 390 mines, it controls 88% of the domestic coal production. 2. Singerani Collieries Company: It operates through a network of 50 mines. 3. Minerals and Metals Trading Corp: It is responsible for the conversion of imported coal into coke for metallurgical and industrial purposes.

India Coal Industry: Issues

Despite having one of the largest reserves, the Indian coal industry does not hold a position in the league of global energy suppliers. This can be attributed to the soaring domestic demand. A study conducted by the Indian Planning Commission and the Coal Ministry revealed that Indias total coal consumption was expected to increase from 510 mts. in 2007-08 to 550 mts. by 2008-09. To meet this requirement, substantial public investment is needed. Even the private players

would need to deploy advanced mechanisms to increase production levels.Coal washeries are also under pressure. It is required to sustain high quality levels within stringent environment regulations. Excessive government regulation continues to be a major concern for the Indian coal industry. The existing legislative framework restricts the private sector in the establishment of coal washeries and regulated mining for specific industries, such as power and fertilizer units.

INTRODUCTION OF CENTRAL COALFIELD LIMITED

C.C.L. is a subsidiary of C.I.L., which has all together eight units, seven coal producing & one meant for planning & designing of mines (CMPDIL). C.C.L. was formed on Nov. 1st, 1975 as a subsidiary of C.I. L. with in 59 collieries. C.C.L. its is continuously of power engaged developing band

professionals, through intensive training with a view to optimum utilization of manpower for achieving the corporate objectives.

C.C.L. with its head quarter at Ranchi operates 59 mines & 7 coal washeries. Each mines &washeries is formed after planning preparation of the project by C.M.P.D.I.L. appraisal & approval. The company is the major source of coal in India. Its all projects lay down certain basis objectives & target for growth & development, consumption, investment & resources to be mobilized.

FORMATION OF C.C.L.

The coal mining in India started in 18th century in Raniganj coalfield. However, organized commercial mining started in the beginning of the 19th century after the introduction in the railway system. During the 1st hundred years, the coal production grew to a level of 33 million tons through a number of privately owned mines.C.C.L. has been on the coal map of the country as a public sector since October 1956. Beginning as National Coal Development Corporation Ltd. (N.C.D.C.), then as central division of Coal Mines Authoring Ltd. (C.M.A.L.) & finally under its present nomenclature, C.I.L. of which C.C.L. is a subsidiary. C.C.L. comprises most of the east-west trading Damodar Valley & the entire Koel Valley Basins. The distribution of coal fields from east to west are Jainti (Deoghargrp., Giridih, east Bokaro, West Bokaro, Ramgarh, South Karanpura& North Karanpura in a Damodar valley &Auranga, Hutar&Daltanganj in the Koel valley .In addition, two significant small coast basins viz. Chope&Itkohri also exist within the command area of the coal company, which extends up to 2700sq Kms.

Organizational Structure of C.C.L.

The Chairman cum Managing Director is the whole time chief executive of the company.The chief vigilance officer is responsible to see that the work is done as per the set rules producer and guidelines and being the guilty to book secretary to board is responsible for keeping the meeting agenda.The Board of Directors consists of functioned directors and nominees from the state and central Govt. The functional Directors are for personnel operation and Finance etc. All functional Directors are indirectly related to the area general managers. Each area general manager is fully responsible for the performance of the area having separate project. Officer for each project is supposed to achieve the projected target fixed by the company as a whole. Each project has a colliery manager to individually supervise all types of activities like transport, production sales realization. The functional director has separate departmental heads namely G.M. sales and marketing, Quality control, Finance personnel administration. All have separate work or duties but are indirectly internally related to each other.

ORGANISATION STRUCTURE OF CCL

CMD
Executive Director (BIGILANCE)

CHIEF OF (INTERNAL AUDIT) (INTERNAL AUDIT)

SECRETARY (TO CMD) (TO CMD) DIRECTOR (TECH. &OPER.) (TECH. & OPER.)

COMPANY SECRETARIAT

(VIGILANCE) DIRECTOR (FINANCE) DIRECTOR (PERSONNEL) DIRECTOR (TECH. PROJ. & PLANINIG)

GM (FIN.) GM (SYS) (FIN.) (SYS)

CMO HOLS HOSS GM (M/S) GM (HRD) GM (P&IR) GM GM (OPER.) GM (Q.C.) GM (TRANS.) GM (SAFTY) CGM (E&M) GM(Equip. & HEMM)

GM (SALES & MARK.) GM (GEO. SURVEY) GM (REVENUE) GM (MT.MGR.) GM (CIVIL) GM (STORES & INVENTORY) GM ( COAL HANDLING PLANT)

AREA (GM)

COLLIARYMANAGER

Objectives of CCL: To optimize generation of internal resources by improving productivity, preventing wastage and to mobilize adequate external resources for meeting investment needs. To maintain high standards of safety for accident free coal mining through safe mining practices and continuous safety audit and risk assessment. To conserve environment through of Committed Plan for reclamation and plantation. To maintain the quality of ambient air and water within the prescribed norms. To introduce mass production technology viz. continuous miners etc. for enhancing underground production of quality coal. To operate mega opencast projects using high capacity equipment with higher availability and utilization Secured through long term Maintenance and Repair Contract (MARC). To beneficiate coal on a substantially larger scale by adding new capacities and supplying quality coal as per customers choice. To create an enabling environment for full realization of employees potential through mindset change customized HRD programmes and synergic teams. To provide adequate number of skilled manpower to run the operations and impart technical and managerial training for upgradation of skill.

 To improve worklife balance by better health care, quality life in townships and excellent educational facilities. To focus on inclusive growth of the community in the command areas of CCL through a host of CSR measures making mining socially sustainable.

BUSINESS OBJECTIVES: To carry on business of Coal Mining. Acquisition of Coal Mining. Production, sale and disposal of coal and its by-products. Coal Beneficiation, manufacturing coke, by products of coal and other business. Manufacturing, trading and other business. Reorganization and reconstruction of coal mines taken over by the Government. Policy formulation and advisory functions. To act as an entrepreneur on behalf of the state in respect of coal industry. To finance replacement expenditure. To develop technical know-how. Exploration and prospecting. To manufacture and sell coal as a patent fuel. To carry on mining and quarrying coal and other byproducts and incidental thereto. To act as traders and carriers of coal and coke and other by-products directly orthrough agents. To act as colliery and mine proprietors, coke manufacturers in all their respective Branches.

Core Value statement: (4Cs) Customer Care Concern for Environment & Safety Care for employees Cost consciousness FUNCTIONS OF C.C.L. : The functions of the company are as follows: 1)To get implemented the policy laid down by the Govt. of India and Coal India Ltd. And ensure working in accordance with the guidelines and direction issued by them from time to time. 2)Toinformed them of the progress with regard to implementation of their policy and programmes. 3)To draw annual plans for production preparation and dispatch of Coal and connected activities 4)To plan and carry out all the operations in such a manner that no risk of life or limb injury or damage to the health of workmen and for this purpose to procure. Provide and put into use the necessary appliances andmaterials.

ROLE OF C.C.L.: With the overall guidance and co-ordination of Coal India Limited, the rules of company are to implement the National policy and Programs. Main Functions As Laid Down By The Government For Coal Are: (a) To act towards achieving corporate objectives and approve and review strategies for achievement of these objectives. (b) To establish policies regarding long- term planning, conservation, research and development, finance, recruitment, training, safety, industrial relations, wages, marketing, purchase and stores. (c) To set targets and monitor them. (d) To approve budgets, determine standard cost and retention prices and evaluate performances. (e) To co-ordinate amongst the Subsidiary Companies. (f) To lay down overall policy regarding coal distribution. (g) To establish broad linkage of consumers at Coalfields. (h) To maintain liaison with major customers. (i) To make on behalf of the Subsidiaries, such purchases of plant, equipment of high unit Value and/or in short supply. (j) All imports and exports to be routed through CIL,and (k) To operate a common coal cadre for CIL and Subsidiary Companies. Under this, Recruitment of personnel at the level of Executives would be done by CIL alone.CIL has to arrange training of personnel and to allot them to the companies. The Subsidiary Companies are responsible for deliver coal, maintain control and carry out after Sales service once the

distribution and broad linkages are decided. Subsidiary Companies are also responsible to realize sale proceeds of coal bills. Coal India will be involved when there areInter- company problems requiring common approach to consumers, Carries etc.

HIGHLIGHTS OF CCL: Central Coal Limited has been on the coal map of the country as a public sector since October, 1956, under different names .In the beginning it was known as National Coal Development Corporation, then Central Division of Coal mines Authority, and finally under of its present India nomenclature Limited, is one as a its the subsidiary The Coal Coalfield with of

headquarters at Ranchi, Jharkhand. Central Limited subsidiaries of Coal India Limited registered under the Companys Act in the year 1975. The mining and extraction of coal is entrusted to a public sector organization Coal India Limited. The Company is

divided into eight subsidiaries and Central Coalfield Limited is one of them.

The company presently known as CCL has a history of more than three decades. Pursuant to the Industrial Policy Resolution of 1956, a company was formed by the name of M/S Hindustan Collieries Private Limited, on 5th September, 1956. The name was changed to the National Coal

Development Corporation. TheNCDCL was formed on 01.10.1956 with 11 state railway collieries in Orissa and Madhya Pradesh. Like other industries and organization, the affair of CCL too is not settled by its owner (Govt. of India). Rather the professional team of management called Board of Directors (BOD) is appointed by the Govt. of India to manage the affair of CCL.It consists of Chairman cum-Managing Director, four functional Directors in charge of operations, personnel, finance and projects and planning. Besides part-time Directors as may be appointed by the Govt. fromtime to time. At present CCL have 67 collieries and 7 washeries under revenue production.

Some of the state collieries are very old, at least one of which that in Giridih has crossed century in the year 1961. It also has 7 coal washeries, a coal oven plant, besides workshop and coal handling plants spread over in Hazaribagh, Palamu, Ranchi, Bokaro, Giridih, and Chatra district.

CCL is the major source of medium coking coal in India. CCLs other important activities are beneficiation of medium coking coal for steel plants through its chain of coal washeries and manufacture of soft coke for domestic kitchen. Most of the production (88%) comes from surface mines. The productivity of underground mines and many of the surface mines is low, but because of high priced of coking coal, the company has been making marginal profit and losses with the recent deregulation of coking coal price the profitability of the company is expected to improve. The

Command area of CCL companies 10 coalfields namely Giridih, East Bokaro, West Bokaro, RamgarhKaitha, North Karanpura, South Karanpura, Auranga, Hutar, Daltonganj and Giridih/ Jayanti.

 Chairmancum-Managing Directors is the full time executive of the company. The collieries and washeries have been grouped into 15 areas each headed by chief General Manager/General Manager. The coal projects are headed by project officer. Coal Coal is a valuable resource and plentiful natural global

Not only does coal provide electricity, it is also an essential fuel for steel and cement production, and other industrial activities.Coal is a combustible, sedimentary, organic rock, which is composed mainly of carbon, hydrogen and oxygen. It is formed from vegetation, which has been consolidated between other rock strata and altered by the combined effects of pressure and heat over millions of years to form coal seams. Coal is a fossil fuel and is far more plentiful than oil or gas, with around 120 years of coal remaining worldwide. What is Coal? Coal is a fossil fuel and is the altered remains of prehistoric vegetation that originally accumulated in swamps and peat bogs. The energy we get from coal today comes from the energy that plants absorbed from the sun millions of years ago. All living plants store solar energy through a process known as photosynthesis. When plants die, this energy is usually released as the plants decay. Under conditions favorable to coal formation, the decaying process is interrupted, preventing the release of the stored solar energy. The energy is locked into the coal.

Coal formation began during the Carboniferous Period - known as the first coal age - which spanned 360 million to 290 million years ago. The build-up of silt and other sediments, together with movements in the earth's crust known as tectonic movements - buried swamps and peat bogs, often to great depths. With burial, the plant material was subjected to high temperatures and pressures. This caused physical and chemical changes in the vegetation, transforming it into peat and then into coal. Coalification The quality of each coal deposit is determined by:

varying types of vegetation from which the coal originated depths of burial temperatures and pressures at those depths length of time the coal has been forming in the deposit

The degree of change undergone by a coal as it matures from peat to anthracite is known as coalification. Coalification has an important bearing on coal's physical and chemical properties and is referred to as the 'rank' of the coal. Ranking is determined by the degree of transformation of the original plant material to carbon. The ranks of coals, from those with the least carbon to those with the most carbon, are lignite, sub-bituminous, bituminous and anthracite (see 'Coal Types' diagram). Types of Coal Initially the peat is converted into lignite or 'brown coal' - these are coaltypes with low organic maturity. In comparison to other coals, lignite is quite soft and its colour can range from dark black to various shades of brown. Over many more millions of years, the continuing effects of temperature and pressure produces further change in the lignite, progressively increasing its organic maturity and transforming it into the range known as 'subbituminous' coals.

Further chemical and physical changes occur until these coals became harder and blacker, forming the 'bituminous' or 'hard coals'. Under the right conditions, the progressive increase in the organic maturity can continue, finally forming anthracite. In addition to carbon, coals contain hydrogen, oxygen, nitrogen and varying amounts of sulphur. High-rank coals are high in carbon and therefore heat value, but low in hydrogen and oxygen. Low-rank coals are low in carbon but high in hydrogen and oxygen content.

Different types of coal also have different uses, as shown in the diagram below.

Where is Coal Found?

It has been estimated that there are over 847 billion tonnes of proven coal reserves worldwide. This means that there is enough coal to last us over 130 years at current rates of production. In contrast, proven oil and gas reserves are equivalent to around 42 and 60 years at current production levels. Coal reserves are available in almost every country worldwide, with recoverable reserves in around 70 countries. The biggest reserves are in the USA, Russia, China and India. After centuries of mineral exploration, the location, size and characteristics of most countries' coal resources are quite well known. What tends to vary much more than the assessed level of the resource - i.e. the potentially accessible coal in the ground - is the level classified as proved recoverable reserves. A proved recoverable reserve is the tonnage of coal that has been proved by drilling etc. and is economically and technically extractable.

Definitions

Resour The amount of coal that may be present in a deposit ce or coalfield. This does not take into account the feasibility of mining the coal economically. Not all resources are recoverable using current technology. Reserv Reserves can be defined in terms of proved (or es measured) reserves and probable (or indicated) reserves. Probable results have been estimated with a lower degree of confidence than proved reserves. Proved Reserves that are not only considered to be Reserv recoverable but can also be recovered es economically. This means they take into account what current mining technology can achieve and the economics of recovery. Proved reserves will therefore change according to the price of coal; if the price of coal is low proved reserves will decrease. Over recent years there has been a fall in the reserves to production (RP) ratio, which has prompted questions over whether we have reached 'peak coal'. Peak coal is the point in time at which the maximum global coal production rate is reached after which the rate of production will enter irreversible decline. However, recent falls in the RP ratio can be attributed to the lack of incentives to prove up reserves, rather than a lack of coal resources. Exploration activity is typically carried out by mining companies with short planning horizons rather than state-funded geological surveys. There is no economic need for companies to prove long-term reserves. All fossil fuels will eventually run out and it is essential that we use them as efficiently as possible. Coal reserves could be extended further through a number of developments including: the discovery of new reserves through ongoing and improved exploration activities;

Advances in mining techniques, which will previously inaccessible reserves to be reached.

allow

Additionally, significant improvements continue to be made in how efficiently coal is used so that more energy can be generated from each tone of coal produced.

COAL: CHOICE FOR INDIAN ENERGY

COAL is the most important and abundant fossil fuel in India. It accounts for 55% of the country's energy need. The country's industrial heritage was built upon indigenous coal. Commercial primary energy consumption in India has grown by about 700% in the last four decades. The current per capita commercial primary energy consumption in India is about 350 kgoe/year which is well below that of developed countries. Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise around 450 kgoe/year in 2010. Considering the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and geo-political perception of nuclear power,

coal will continue to occupy Centre-stage of Indias energy scenario. With hard coal reserves around 246 billion tonnes, of which 92 billion tonnes are proven, Indian coal offers a unique ecofriendly fuel source to domestic energy market for the next century and beyond. Hard coal deposit spread over 27 major coalfields, are mainly confined to eastern and south central parts of the country. The lignite reserves stand at a level around 36 billion tonnes, of which 90% occur in the southern State of Tamil Nadu. INVENTORY OF COAL RESOURCES OF INDIA As a result of exploration carried out up to the depth of 1200m by the GSI, CMPDI and MECL etc., a cumulative total of 267.21 Billion tonnes of Geological Resources of Coal have so far been estimated in the country as on 1.4.2009. The state-wise distribution of coal resources and its categorisation are as follows: State Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh (in Million Tonnes) Geological Resources of Coal Proved Indicated Inferred Total 9194 6748 2985 18927 31 348 0 10910 40 36 0 29192 19 3 160 4381 90 387 160 44483

State

Geological Resources of Coal Proved Indicated Inferred Total 39480 8041 5255 89 9 19944 0 866 11653 1058 20 30894 10295 2907 17 0 31484 58 196 11603 12347 0 6338 2645 1992 471 13 13799 43 0 5071 76712 20981 10154 577 22 65227 101 1062 28327

Jharkhand Madhya Pradesh Maharashtra Meghalaya Nagaland Orissa Sikkim Uttar Pradesh West Bengal Total

37920 26721 0

Categorisation of Resources: The coal resources of India are available in sedimentary rocks of older Gondwana Formations of peninsular India and younger Tertiary formations of north-eastern/ northern hilly region. Based on the results of Regional/ Promotional Exploration, where the boreholes are normally placed 1-2 Km apart, the resources are classified into Indicated or Inferred category. Subsequent Detailed Exploration in selected blocks, where

boreholes are less than 400 meters apart, upgrades the resources into more reliable Proved category. The Formation-wise and Category-wise coal resources of India as on 1.4.2009 are given below: Formation Gondwana Coals Tertiary Coals Total Proved Indicated Inferred Total

105343 123380 37414 266137 477 90 506* 1073

37920 105820 123470 * 267210 (in Million Tonnes)

* Includes 456 Mt of Inferred resources established through mapping in NE region. The Type and Category-wise coal resources of India as on 1.4.2009 are given in table below: (in Million Tonnes) Type of Coal (A) Coking :-Prime Coking -Medium Coking -SemiCoking Proved Indicated Inferred 4614 12449 482 699 12064 1003 0 1880 222 Total 5313 26393 1707

Sub-Total Coking (B) NonCoking:(C) Tertiary Coal Grand Total

17545

13766

2102 33413

87798 109614 35312 232724 477 90 506 1073

10582 0 123470 37920 267210

Status of Coal Resources in India during Last Five Years: As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and SCCL etc., the estimation of coal resources of India has reached to 267.21 Bt. The estimates of coal resources in the country during last 5 years are given below: (in Million Tonnes) As on Geological Resources of Coal Prov Indicat Inferr ed ed ed 1.1.20 04 1.1.20 05 1.1.20 06 91631 92960 95866 116174 117090 119769 37888 37797 37666 Total 245693 247847 253301

1.1.20 07 1.4.20 07 1.4.20 08 1.4.20 09

9792 118992 0 9906 120177 0 1018 29 124216 1058 20 123470

38260 38144

255172 2573 81 2645 35 2672 10

38490 37920

COAL EXPLORATION: Exploration for coal in the country is carried out in two stages i.e. the RegionalExploration and Detailed Exploration. The regional exploration for coal is carried out by theGovernment organizations whereas detailed exploration is largely undertaken by coalcompanies.

COAL RESOURCES As a result of exploration carried out by GSI, CMPDIL and MECL etc., a cumulativetotal of 264.535 Billion tonnes of Geological Resources of Coal have been estimated in thecountry as on 1.4.2008 up to a depth of 1200m. Details of the state-wise geological resourceof coal is given as under:(in Million Tonnes)

State Geological Resources of Coal Proved Indicated West Bengal Jharkhand Bihar Inferred Total

11584.0511680.055070.7 28334.84 31628.9 6338.32 75460.14 0 160 160

37492.92 0

Madhya Pradesh 7895.96 Chhattisgarh10419.32 Uttar Pradesh 765.98 Maharashtra

9882.37 2781.63 20559.96 4442.57 44134.04 1061.8

29272.15 295.82 0

5004.26 2821.66 1992.17 9818.09 31728.09 14313.66

Orissa 29221.59 65263.34

Andhra Pradesh9007.13 Sikkim Assam 0 58.25

6710.65 2978.81 18696.59 42.98 34.01 101.23 372.64 90.23

314.59 24.04

ArunachalPradesh31.23 40.11 Meghalaya 88.99 Nagaland 3.43 69.73

18.89

300.71 459.43 1.35 15.16 19.94

Total 101829.49 264535.06.

124215.96 38489.61

Uses of Coal Access to modern energy services not only contributes to economic growth and household incomes but also to the improved quality of life that comes with better education and health services. All sources of energy will be needed to meet future energy demand, including coal. Coal has many important uses worldwide. The most significant uses are in electricity generation, steel production, cement manufacturing and as a liquid fuel. Around 5.8 billion tonnes of hard coal were used worldwide last year and 953 million tonnes of brown coal. Since 2000, global coal consumption has grown faster than any other fuel. The five largest coal users - China, USA, India, Japan and Russia - account for 72% of total global coal use. Different types of coal have different uses. Steam coal - also known as thermal coal - is mainly used in power generation. Coking coal - also known as metallurgical coal - is mainly used in steel production. The biggest market for coal is Asia, which currently accounts for 56% of global coal consumption; although China is responsible for a significant proportion of this. Many countries do not have natural energy resources sufficient to cover their energy needs, and therefore need to import energy to help meet their requirements. Japan, Chinese Taipei and Korea, for example, import significant quantities of steam coal for electricity generation and coking coal for steel production. Other important users of coal include alumina refineries, paper manufacturers, and the chemical and pharmaceutical industries. Several chemical products can be produced from the by-products of coal. Refined coal tar is used in the manufacture of chemicals, such as creosote oil, naphthalene, phenol, and benzene. Ammonia gas recovered from coke ovens is used to manufacture ammonia salts, nitric acid and agricultural fertilizers. Thousands of different products have coal or coal by-products as components: soap, aspirins, solvents, dyes, plastics and fibers, such as rayon and nylon. Coal is also an essential ingredient in the production of specialist products:

Activated carbon - used in filters for water and air purification and in kidney dialysis machines. Carbon fibre - an extremely strong but light weight reinforcement material used in construction, mountain bikes and tennis rackets. Silicon metal - used to produce silicones and silanes, which are in turn used to make lubricants, water repellents, resins, cosmetics, hair shampoos and toothpastes.

NATIO

ENERGY L

PER CAPI

ENERGY FORM COAL

AVE

ELEMENT OF COST MANAGEMENT 1. Salary and wages -40% 2. Stores 3. Administration expenses5/tones-CIL 0.5/Tones-IICM 6/Tones-other 4. Power 5. Transportation 6. Welfare expenses (CSR) 7. Other contract 8. Maintenance cost 9. Over burden revenue(OBR) 10. 11. 12. Interest Depreciation Interest Others

CCL PROVIDING BENEFITS TO EMPLOYEES BY:1. HOUSE FURNISHING ALLOWANCE(HFA) 2. ELECTRICITY ALLOWANCE(70% EA)

3. 4.

COCKING ALLOWANCE SCHOOL, COLLEGE, RECREATION CLUBS, GAMES &SPORTS,HOSPITALS,DISPENSARIES ETC. ALLOWANCES

5. TRANSPORTING ALLOWANCE 6. CONVEYANCE ALLOWANCE 7. VECHILE MAINTANANCE ALLOWANCE 8. DRIVER ALLOWANCE 9. TRANSPORTATION ASSISTANCE 10. 11. 12. 13. 14. 15. EDUCATION ALLOWANCE HOSTEL ALLOWANCE PROFESSIONAL DEVELOPMENT ALLOWANCE INTERNET ALLOWANCE (1%) PERSONAL ALLOWANCE TRAVEL ALLOWANCE

16. LUNCH ALLOWANCE THROUGH SODEX MEAL VOUCHERS 17. 18. 19. 20. 21. MOBILE/TELEPHONE ALLOWANCE HOUSE RENT ALLOWANCE RE-IMBURSMENT OF MEDICAL EXPENSES LEASE ACCOMODATION GRATUITY

22.

PENSION (12%)

23. CONTRIBUTARY POST RETIREMENT MEDICAL BENEFIT 24. 25. ACCIDENTAL DEATH DEPENDENT EMPLOYEMENT

INITIAL PUBLIC OFFERING (IPO)

An initial public offering or IPO is the sale of stock by a company to the public .A company can raise fund through issuing either debt or equity. If the company has never issuing equity to the public, its known as an IPO. In 1602 the Dutch East Indian Company was the first company to issue stock and bonds in the world in an IPO. Mainly IPO is issue for raising fund for development, modification and expansion of the company.

Why it is called IPO?

IPO is stand for initial public offering.It means that first time offering share by company to the public. If any company offer share first time in share market then it is called IPO. There should be certain rules and regulations which have been followed by company under SEBI act .There is a legal judicially which regulates and take action against the missconduct of the company. If any miss-happening occurred during operation than SEBI will take action against the company.

Dos and Donts IPO

Investors should take proper care while investing in IPOs:DOs

Read the prospectus/abridge prospectus and pay special attention to: Risk factor

Outstanding litigation and defaults, if any

Financial of the issuers Object of the issuer Company history Background of the promoters

 Instruction for making an application

In case of any doubt/problems, contact the compliance office named in the offer document. In case you do not receive, within due period, the physical certificate /credit to demate account or refund of application money, lodge a complaint with the compliance officer of the issuer company and with the post-issue lead manager listed in the offer document.

DONTs

Dont fall prey to market rumors. Dont go by implicit/explicit promise made by the issuer or any of else.

Dont invest based on the prevailing Bull Run of the market index or of scripts of other companies in the same industry or scrip of the issuer company/group companies.

Dont bank upon the price of the share of the issuer company to necessarily go up.

Financial planning
Investments are made with certain financial objectives. These objectives should be defined clearly and be measurable in money terms. For example, it is not enough to say I want to retire comfortable. Such an objective should be stated, as I want to retire with the

ability to spend Rs. 2, 00,000 annually, adjusted for inflation. An investor saves today, to meet certain financial needs tomorrow unless the investor is clear about the purpose of saving, his efforts would not result in the desire benefits. Therefore, an investor must first identify his financial needs. For example, An investor many have one or more of the following financial needs: 1. To retire at age 55 with an annual income of Rs 3, 00,000. I am now 35 years of age. 2. To complete payoff the housing loan but the time I retire 20 years later. 3. To pay for my five year old daughters college education that would cost me Rs. 1, 50,000 per year for 4 years.

WHY PUBLIC COMPANY ENTER INTO IPO?

Public Company need 7 people to incorporate the company and associate of 20 members in banking sector where as private company need 2 people to commence the business. There should be certain restrictions in private company i.e., there is restriction of public to purchase the share and also restriction of transfer the share. If anybody wants to purchase the share of private company than he/she can approach the owner of the company and discuss about investment. Private company not discloses the company information because of having few shareholders. Private company need less capital to start the business .Private

company only put small amount of money and file legal right and follow the judicially to start the business .Due to more restriction image of private company is not good in the mind of public. Whereas comparing the public company to private company, pubic company is far better than private company. Public company provides various facilities to the shareholders. In public company shareholder free to sale and buy the shares. There should be no restriction of public to purchase the shares. Shareholders can transfer the share according to the article of association. It should disclose the full information about the company in the memorandum of association that what amount of paid up capital is invested in the business and declaration of the partner. They creating good image in the public mind because of open declaration of all business. Public company has thousands of shareholders and there should be proper rules and regulations which are under control of the board of the director. BOD must report the commission (sec).Public company has sold at least a portion of share to the public and trade on a stock exchange. This is why doing on IPO is also referring to as GOING PUBLIC.

Benefits of IPO
Enabling cheaper access to capital because of good public image in the market.

 Exposure, prestige and public image they are not facing problem to raising the fund from public. Due to good public image company will easy acquisitions of funds and investments. Attracting and retaining better management and employees through liquid equity participation. Facilating acquisitions. Creating multiple financial opportunities like shares, convertible debts, cheaper bank loans etc.

Procedure IN IPO
Any company want to issue share at first time then the company will go to underwriter and lead manager. These are the person who registered under security exchange board of India (SEBI) and provide certificate of issuing shares to the public. The company who fulfill all the legal requirements of underwriter and lead manager then they are issue share to public in open market. This legal requirements are verified by underwriter and they offer to this share in open market for survey .If 90% of total shares of the company agrees to purchase by the public than underwriter and lead manager will give the permission to issue IPO and if it is not accepted by public than underwriter will reject the proposal .If shareholder will accept the 85% of total shares of company which is 5% less to 90% of total shares than at that time underwriter will purchase the 5% share which is the

requirement of fulfilling total of 90% .underwriter will charge commission of 8% which is purchase of share 5%.If any company wants to issue IPO it should have minimum number of shareholder which is 50.

HIGHLIGHT of CIL IPO:

SECTOR- COAL MINING ISSUE OPENED 18TH OCT, 2010 ISSUE CLOSED - 21ST OCT, 2010 FACE VALUE- Rs10 ISSUE TYPE: 100% BOOK BUILDING ISSUE ISSSUE SIZE: 10 % of Total share , i.e. 631,636,440 EQUITY SHARE ISSUE ALLOCATION: CATOGERY EMPLOYEE RESERVATION NET ISSUE TO PUBLIC QIBs NON INSTITUTIONAL NO. OF SHARE 63,163,644 5,684,727,796 284,236,398 85,270,919

RETAIL

198,965,479

SHARE HOLDING PATTERN (%): PRE-ISSUE PROMOTERS PUBLIC 100% NIL POST-ISSUE 90% 10%

SHARE OUTSTANDING (NOS.): PRE-ISSUE 6,316,363,800 POST-ISSUE 5,684,727,360

GRADING: CRISIL RATING- 5 OUT OF 5

CIL-IPO Coal India ltd. is a maharatna company; it is the world largest coal producer. The company accounts for nearly 82% of Indias total coal production. It is unique & there are no comparable companies listed on the stock in India. Coal India IPO was a blockbuster response from qualified institutional bidders (QIB) as it got subscribe 24.7 times. The

issue was opened on 15th, Oct, 2010 & closed on 21th, Oct, 2010. The shares of CIL were listed on 4th Nov, 2010. Coal India made a debut at price of Rs. 308 against the offer price of Rs. 245/share at the time of listing and also a discount of 5% to the retail investors. The offer price of Rs. 245 was determined by selling shareholder & the company in consultation with the BRLMS, on the basis of assessment of market demand from the investors for the offer equity share by way of the book building process. The face value of equity share is Rs. 10 each & offer price is 24.5 times the face value. The objects of the offer were to carry out the divestment of Rs.631, 636,440 equity shares by the selling it to the shareholders& to achieve the benefits the equity shares on the stock exchange. The company could notreceive any proceeds from the offer &all proceeds go to the selling shareholders. In this whole report we had tried to find out the fair value of the share by different method like NET WORTH PER EQUITY SHARE METHOD.
NET WORTHPER EQUITY SHARE METHOD
Rs. Cr EBIT Tax (%) NPAT Depreciati on D.C.Flow Capex termin al FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 value 10240 13139 12787 16137 20151 22858 26047 28395 30393 33718 . 33 33 33 33 33 33 33 33 33 33 . 6861 8803 8567 10812 13501 15315 17452 13025 20726 22591 . 1572 8432 -3500 1820 10623 -4000 2012 10579 -3000 2124 12936 -3000 2224 15725 -3000 2313 17628 -3000 2391 19843 -3000 2461 21485 -3000 2522 23248 -3000 2577 . 25168 . -3000 .

Change in W.C free cash flow

869 5801

587 7210

972 8551

802 10738

879 13604

876 15504

959 17802

1017 19503

1108 21356

1207 . 23376 . 22047 7

EARNING PER SHAR E Present value of future cash flow present value of terminal value net debt equity value N0. of share (cr) value per share (Rs) (Rs.cr) 72338 68154 44777 18377 0 532 385

Different analysis value of the stock using different methods, on an average the share value of coal like work out to around Rs.310/share which from the retail investors perspective (who have been allotted shares at Rs.232.75, considering 5% discount) means over 33% returns. The market need to treat CIL as a utility play. Investment in this IPO was a value for money.

PROCEDURE OF ISSUE IPO IN CIL EMPLOYEES

CIL assigned at least two persons from project/unit and area level. They collect the share application from head quarter at the same time they fill-up the form and send the share to the shareholders & trading center. After

collecting share they distribute among employees who apply for the share. CIL assigned the committee of executive who check the criteria of employees whether they fulfill the share allotment criteria or not. It distributes the share of those employees who are doing job presently. They not provide the share of exemployees of CIL. Share could be provided in form of lot which is 25 in one lot. Minimum subscription amount of share is Rs. 1, 00,000. Most of the employees in CCL had not got any share becauseof scarcity of share. They want to refund the share money which is paid at the time of share application.

IPO PURPOSE
There were many purposes but out of them these three were major:

To retain the NAVRATNA status.

If possible to attain the MAHARATNA status.

To achieve the disinvestment of the government of India.

IPO GRADING
IPO grading is assigned by a credit rating agency (CRAs) registered with SEBI, to the initial public offering (IPO) of equity shares or any other securities which may be

converted into or exchanged with equity shares at a later date. The grade represents a relative assessment of the fundamentals of that issue in relation to the other listed equity securities in India. Such grading is generally assigned on a five-point scale with a higher score indicating stronger fundamentals and vice-versa as below. IPO grade 1- poor fundamentals IPO grade 2- below-average fundamentals IPO grade 3- average fundamentals IPO grade 4- above-average fundamentals IPO grade 5- strong fundamentals IPO grading has been introduced as an endeavor to make additional information available for the investors in order to facilitate their assessment of equity issues offered through an IPO.

Credit rating agency are registered with SEBI

1. Credit analysis & research ltd. (CARE) 2. ICRA Limited 3. CRISIL 4. FITCH Rating

There should be certain criteria for fixing the selling price of the share
There should be agreement between underwriter and company. Underwriter act as a mediator between company and shareholders .He is the person who give legal permission to issue share by company to public. 1. Lead manager and company will decide the price of the share.
2.

Book building process-under this process a company give offer letter to the shareholder to purchase the share. Fixing the price on the basis of auction and bidding which will provide maximum benefits to the company.

3. Grade taking-(credit rating agency)In this process the underwriter and lead manager check the credit rating facility according to the grade of the company and they decide how much credit will provided to the company. A. In the Issue date underwriter and lead manager check the company performance of preceding 5 years and company should have profit during last 3 years.
B.

The company should be financially sound.

C. Underwriter and lead manager check the investment grade of the company whether they are able to invest or not.

EXPLANATION ABOUT WHY GOI ISSUE IPO IN OPEN MARKET?

Since 1947 GOI faced substantial deficit because of the Indian leaders& public welfare.GOI does not reduce these expenditures because they are providing various services to the publiclike:-Subsidiary in gas, petrol, diesel,etc.& convenience service to the Indian leader. For the recovery purpose of all these expenses which is provided in the form of subsidiary& conveniencethey want to recover from public by issued IPO. GOI was decided to issue the IPO of those companies which are listed as a good financial performer and had good public image in the market. GOI issued the share of CIL in the open market to know the real market value of the share.GOI issued 63.16 crores equity share to the public which has got 15,000 crores as a profit from the share market. Apart from that 10% share is reserved for the coal Indiaemployees (discounted of 5%) and remaining 90% soldin the market. Ministry of coal mines fixed offer price of per share is Rs. 245.Theyfaced various problems at the time of issued IPO to the public.
1.

It faces the external problem of Indian politics & raise big issue of the parliament regarded CIL Share. Company could decide whether the shares are sale in the open market or not because Coal India LTD. is the big company and its shares are also very big. So, it is the big problem which they are faced at the time of issue share to the public.

2.

3.

Coal India ltd. is the labours intensive company and most of the employees are uneducated. They dont understand the company strategy because lack of education & unawareness. At the same time they faced the problems of D-mate a/c which is necessary for the purchased and trade the share of coal Indialtd. There is 4lakh D-mate a/c areopened. For share trading shareholder need bank account with D-mate account. The Procedure of opened D-mate a/c. is Need two photocopy of PAN card.

4.

Xerox copies of address proof were share letter is received.

Two copy of current photo. Depository participants (DP) plays a vital role in opening of D-mate accounts of coal India employees.
5.

Due to lack ofemployees education, coal India ltd. decided to aware the employees about the IPO through road show.

CIL officers& executive did various seminars and meeting for the awareness of CIL employees regarding IPO of CIL.

PRICEING OF IPO Price earnings ratio=EPS *price earning

10*20=200 The GOI earn profit of RS 15000 crores. For the recommendation of issuing IPO is the ministry of corporate affair. Under these consoled fund of Indian department provided a proposal. Presently market value of share is decline but value of CIL share is raise of RS 385 which is Rs 232.75 in initially. According to this we can say that share of CIL is making good position in the Presentmarket. Today all public sector companies hold good price image in the share market. Those who are purchased the share of CILhas got good profit from share in future.

PERFORMANCE OF CIL AT A GLANCE

Debt/total fund reduced 60% to 10%. Project maintenance of opening margin is 30% (approx.) Project annual production is 486.5MT by 2012.

COMPOUNDED ANNUAL GROWTH RATE

2009-10 Rs.cr Sales (Gross) 38,866 52,188 45,796 2008-09 Rs. Cr 2007-08 Rs.cr

PBT 8,738 Net worth 18,342

13,965 25,844

5,744 19,165

CAGR (compounded annual growth rate): 26.40% CIL is financially sound company& enjoying the monopoly in the market because CIL is the largest coal company in the world with largest proven reserve of coal. CIL has market share of more than 80% in India. PBT is Rs 13,964.92 crores for the year 2009-2010. Net worth Rs 25843.74 crores for the year 2009-2010. Sale price of Indian coal is much lower than the comparative grade of coal in the international market. NET ASSET VALUE PER EQUITY SHARE: 1. As of June 30, 2010 (Consolidated): Rs. 44.94 2. As of June 30, 2010 (Standalone): Rs. 29.69 3. Offer Price: Rs. 245 4. As of June 30, 2010 (Consolidated) after the Offer1: Rs. 44.94 5. As of June 30, 2010 (Standalone) after the Offer1: Rs. 29.69 There will be no change in the net worth post-Offer as the Offer is by way of offer for sale by the Selling Shareholder.

Note: 1.Net asset value per Equity Share represents net worth (excluding miscellaneous expenditures, if any) as restated, divided by the number of Equity Shares outstanding at the end of the period. 2. The above information has been adjusted for all periods, based on new number of shares after sub division of each equity share of face value of Rs. 1,000 each into 100 equity shares face value of Rs. 10 each.

Valuation
The largest IPO ever of India generated high investor interest, particularly in institutional investors, which reflected in the over Rs. 2, 35,000-crore the IPO has garnered in subscriptions. Coal India Ltd. was a coal mining company and there is no other listed peer in India with which it can be compared with. Since the Offer was being made through the Book Building Process, the Offer Price could be determined on the basis of investor demand

C OALINDIA

P OF ANDL R IT OS

COALIND L IA IMI BAL ANC S EET E H

I. S OUR EOFF C UN

Net Block/Net Fixed Assets b) Capital W.I.P. (Net) 2. Investment 3. Deferred Tax Assets 4. Current Assets, Loans & Advances: a) Inventories b) Debtors c) Cash and Bank Balance d) Loans and Advance e) Other Current Assets Total Current Assets & Advances Less: Current Liab. & Provisions Net Current Assets T OTAL 103943. 96 73665.0 9 217713. 15 154415. 5 14474.3 1

141945.21 40501.67 5182.67 46891.03

151618.81 34304.7 5653.82 50727.97

117717. 53 51244.8 3 260700. 75 120898. 32 16082.3 2 564212.01 448471.47 115740.54 350261.12 566643.75 531679.68 34964.07 277269.37

PEER ANALYSIS
WE HAVE COMPARED THE COAL INDIA WITH THE FOLLOWING TWO DIFFERENT TYPES OF PEER GROUP: INTERNATIONAL COAL PRODUCER TOP 5 INDIA N PSUs INTERNATIONAL PEERS INDIAN PSUs
PEERS SALE (RS. CR) EBITDA (RS. CR) EBITDA MARGINS (%) PAT (RS CR) PAT MARGIN (%) CMP (RS) EQUITY CAPC(RS CR) NET WORTH (RS CR) FACE VALUE (RS) SHARE OUTSTAN D (CR) COAL INDIA 44,615 .3 14,741 .5 33% 9,622. 5 22% NA 6,316. 3 25,843 .7 10.0 631.6 RIO TINTO 188,21 2.5 33,777. 0 18% 24007. 5 13% 2692.4 23,265. 0 361,85 4.0 112.5 209.4 VALE 107,72 5.5 41,242. 5 38% 24,070. 5 22% 1386.0 109,12 5.0 268,94 7.0 225.0 485.0 SHENH UA 81,339. 7 31,585. 9 39% 24,262. 7 30% 280.5 13,336. 2 272,73 5.3 6.7 1,989.0 ONGC 101,76 0.0 44,439. 0 44% 19,403. 0 19% 1394.0 2,139.0 101,40 7.0 10.0 213.9 BHEL 33,173 .0 5,588. 0 17% 4,326. 0 13% 2619.0 489.5 15,896 .0 10.0 49.0

TOP 5
NTPC 48,256 .0 13,075 .0 27% 8,837. 0 18% 218.0 8,245. 0 62,628 .0 10.0 824.5 SAIL 40,600 .0 9,234. 0 23% 6,790. 0 17% 225.0 4,130. 0 33,739 .0 10.0 413.0 GAIL 27,035.0 5,453.0 20% 3,327.0 12% 489.0 1,268.0 17,810.0 10.0 126.8

EPS (RS) PE(X) PBV (X)

15.6 NA NA

114.6 23.5 1.6

49.6 27.9 2.5

12.2 23.0 2.0

90.7 15.4 2.9

88.4 29.6 8.1

10.7 20.3 2.9

16.4 13.7 2.8

26.2 18.6 3.5

The current market price of CIL is Rs 385.55 and the turnover is 90.19cr per year. The price earnings ratio is 50.26. Yes, common investor should buy the share of CIL because the interest or dividend paid is handsome and every investor wants to earn good profit. More over its government company and the investor should not worry Investment Summary:
Worlds Largest Coal Reserve Holder and Coal Producer The company is the largest coal reserve holder and the largest coal producer in the world. Further, the reserves of the company are well diversified among various locations in India. The company accounts for around 82% of coal production in India.

Production Capacity Ramp-up

The company has plans to increase raw coal production capacity from current of 461.9 MTPA (Million Ton

Per Annum) to 486.5 MTPA by FY12.The company is also planning to add 20 coal beneficiation facilities with an aggregate additional capacity of 111.10 MTPA taking the total coal beneficiation facilities to 37 with beneficiated capacity to 150.5 MTPA

Measures to Improve Profitability

The company is taking following steps to improve its profitability. The company is looking to increase its beneficiated capacity. Beneficiated coal commands significantly higher market prices than non-beneficiated coal with no significant rise in cost. Therefore, with the increasing capacity, the revenue contribution from the beneficiated coal is not only increase the topline but also improve profitability. The company intends to increase contribution of coal sold through e-auction scheme. Since, the price of raw coal sold under the e-auction scheme is significantly higher than the price under FSA (Fuel Supply Agreement), the move is expected to improve topline as well as profitability. The company is making efforts to increase revenue contribution from high grade non-coking coal. As the pricing of high grade non-coking coal is generally based on price of landed cost of comparative quality imported coal, which is significantly higher than the FSA, such move will also add to the margins of the company.

CONCLUSION
Today the share of CIL performs well and hikes continuously. So, the shareholder got benefit from shares. Sensex is going down but the value of CIL share is rising. Its shows that, if the share of CIL rises in unfavorable condition than what is expected from favorable condition. After discussion of all above information regarding IPO I think that the shares of CIL raise continuously and company earn more profit day-to-day. Coal India (CIL) is the world's largest coal company both in terms of production (431mt in FY11 -82% of India's total production) and reserves. CIL operates 471 mines in 21 major coalfields (five coal fields accounted for 65% production over the last three years) across 8 states in India. It enjoys higher margin as compared to its global peers due to low cost of production which gives the further room to the company to increase its domestic price. Its initial public offering (IPO) was a blockbuster response from qualified institutional bidders (QIB) as it got subscribed 24.7 times. As retail and high net worth individuals (HNIs) bidding closes

today, experts say the CIL IPO could saw a strong demand from that side too. According to Edelweiss Securities valuation, CIL is fair value is at Rs 316 per share as coal prices are unlikely to come down in India. According to Angel Broking Firm, the value per share works out to be Rs 294 according to DCF Method, and according to us the fair value of CIL is share comes out to be Rs 385 through NET WORTH PER EQUITY SHARE method. Though analysts value the stock using different methods, on average the fair value of Coal India works out to around Rs. 310 per share, which from the retail investors perspective (who had been allotted shares at Rs. 232.75, considering 5 per cent discount) means over 33 per cent returns. The market need to treat Coal India (CIL) as a utility play. Investment in this IPO was a value for money. There is not even a single broker or research house we came across that did not have a buy rating on the company. Whatever to be the fair price of Coal India, retail investors should have no reasons to worry. In fact, considering Coal India solid business model and prospects in the industry, experts advise to hold on to the stock for the long term. The company is well positioned to capitalize on significant demand supply gap in India and hence the price at which the share was quoted was Rs. 245 which less than Rs. 297, it means that they offered at discount and has prospect of increase in price which is presently Rs. 385

BIBLIOGRAPHY
BOOKS:

ICWA : Shri Salman Khurshid(A Guide To Investors) Magazine : Business Today Newspaper : economics times
WEBSITES:

www.cil.org www.google.com www.timkenindia.com