Indian Coal Markets – Challenges and Future Outlook in context of Power Sector By Mr. Arun Bhalla

1. Indian Coal Markets – Challenges and Future Outlook in context of Power Sector By Mr. ArunBhalla Chief Executive- Power Business Development Shree Cement Limited 28th August 2013

2. SEQUENCE OVERVIEW – ENERGY, COAL, POWER • DEMAND & SUPPLY – SCENARIO - COAL MANAGING COAL AVAILABILITY • CONCLUSION • BUSINESS OVERWIEW – SHREE CEMENT LTD. 28th August 2013

3. OVERVIEW – ENERGY, COAL, POWER • Energy pivotal to the growth of country’s Economy. • India’s robust and sustained growth has resulted in strong demand for clean and Economical Energy. • Energy consumption reached level of 575 M.T.O.E (India 4th largest energy consumer in the world) – increasing at CAGR of 8% • COAL – one of the major contributor of India’s energy basket. • 5th largest Reserves of COAL in the world (284 BT). 28th August 2013 1.

4. OVERVIEW cont… • 3rd largest Producer of Coal after US & China. • COALsupporting bulk of country’s Power capacity (223 GW - 57%, COAL Fired) • Dominance of COAL as the fuel for power plants is to continue. • India 5th largest Electricity Market – 223 GW Installed Capacity. • India suffers from major Power shortages. 28th August 2013 2.

5. OVERVIEW • Around 250 Million Citizens having no access to Electricity. • Generating Capacity to reach 300 GW by 2017. (COAL Fired Plants ~ 60%) • COAL shortages dragging growth of Power Sector/Economy. • 100 GW of capacity addition under various stages of implementation – suffering due to COAL shortages & 25GW-stranded. • PLF of COAL fired plants at 70% (March 2008 Plf at 79%) 28th August 2013 3.

6. SEQUENCE OVERVIEW – ENERGY, COAL, POWER • DEMAND & SUPPLY – SCENARIO - COAL MANAGING COAL AVAILABILITY • CONCLUSION • BUSINESS OVERWIEW – SHREE CEMENT LTD. 28th August 2013

7. DEMAND & SUPPLY – SCENARIO - COALcont…. • COAL Demand increased @ CAGR of > 6.5% over last 5 years (11th Five Year Plan) • COAL Production increased @ CAGR of 4.6% over last 5 years • Shortage of COAL at 17% of total Demand (650MT/540MT/ import~100MT) • Main Reason for shortages – Failure to Ramp up Production – “A Paradox of Scarcity in the Land of Plenty” • COAL Demand by 2016-17 (12th Five Year Plan) expected to reach 980MT • COAL Production by 2016-17 estimated at 715MT (with Captive Mining ~ 795MT) – shortfall at 265MT/185MT • Dependence on Imports to Rise 28th August 2013 4.

8. DEMAND& SUPPLY – SCENARIO - COAL • Key challenges for sustainability of Power Sector is to manage COAL availability (Domestic/Import) • India’s COAL Imports increased at a CAGR of 16% for 2006-07 to 2011-12 • Imports account for 16% of Domestic COAL consumption in Year 2012 (7% in Year 2003) 28th August 2013 5.

9. SEQUENCE OVERVIEW – ENERGY, COAL, POWER – Sectors • DEMAND & SUPPLY – SCENARIO - COAL MANAGING COAL AVAILABILITY • CONCLUSION • BUSINESS OVERWIEW – SHREE CEMENT LTD. 28th August 2013

10. MANAGINGCOAL AVAILABILITY cont… • Enhancing Domestic Production (R/P ratio 103) (Indonesia – 19, China- 31) • OCM – contributing 90% of production; UGM – contributes 10% COAL Product. • Using Room & Pillar Technique (recovery 40%) vis-à-vis Long Wall Technique (recovery 80%) • Policy Initiatives • Single window Mechanism • R & R policy • Captive COAL Mining • JVs with Private Companies. 28th August 2013 6.

11. MANAGING COAL AVAILABILITY • State Govt. partnering in development of COAL sector. • Incentivizing Investments in the Exploration/Infrastructure Development. • Adoption of Technologies for Minimizing COAL Consumption. • Engaging of MOD’s (Mining Developers-cum-Operator) • Rationalization of COAL Linkages. • Use of Washed COAL. • COAL Blending. • Imports. 28th August 2013 7.

12. SEQUENCE OVERVIEW – ENERGY, COAL, POWER – Sectors • DEMAND & SUPPLY – SCENARIO - COAL MANAGING COAL AVAILABILITY • CONCLUSION • BUSINESS OVERWIEW – SHREE CEMENT LTD. 28th August 2013

13. CONCLUSION • Power Sector growth, the main driver for the Country’s Economic Growth. ( COAL sector contributing 1.5% of India’s GDP) • COAL Sector is critical to the Power Sector growth. • COAL Sector – Reforms lagging. • Policy makers are unable to institutionalize, unbottling of bottlenecks in the development of COAL Sector. • Mining Planning not getting the required focus. • Opening the sector for Private participants. • Infrastructure development seamless synchronization of Rail, Road, Inland subways and Port Infrastructure is the need of the hour. 28th August 2013 8.

14. SEQUENCE OVERVIEW – ENERGY, COAL, POWER – Sectors • DEMAND & SUPPLY – SCENARIO - COAL MANAGING COAL AVAILABILITY • CONCLUSION • BUSINESS OVERWIEW – SHREE CEMENT LTD. 28th August 2013

15. BUSINESS OVERVIEW – SHREE CEMENT LTD. • Focused on Cement Manufacturing and Power Generation (Thermal) • Cement Capacity 13.5 MTPA Single location largest Kiln capacity in the world. • Installed Power Generation Capacity of 560 MW (Captive 260MW + Merchant IPP 300MW). • 2ndLargest producer of Green Power (WHR) of 43MW. • Mining Planning not getting the required focus. • Power Trading Division- (Category-I Trading Licensee) Trading 3rd party portfolio including trading on Power Exchanges. 28th August 2013 9.

16. CEMENT OVERVIEW Capacity grew at a CAGR of 29% during FY07-FY12 Production doubled during FY07-FY12 28th August 2013 10.

17. POWER OVERVIEW Installed Capacity doubled by adding 300 MW of Merchant Power Capacity in FY12. 28th August 2013 11.

18. GLOBAL ALLAINCE • First Indian Cement Company to join Cement Sustainability Initiative of World Business Council of Sustainable Development. • Member of Cement Sector Task Force of APP-7, formed by Govt. of India, USA, China, Japan, Korea, Canada and Australia. • Global Reporting Initiative to improve information sharing on Environment and Social issues. • Endorsed the Global Roundtable Joint Statement on Climate Change to discuss issues for shaping public policy on climate change. 12.

19. THANK YOU ARUN BHALLA (M) – 9212077694/9910171715 E-mail – bhallaak@shreecementltd.com bhallaarun@rediffmail.com