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Our People Vision – “Creating Value, Wealth and Partnerships for our Customers.” Value with Wealth BCD
Corporate Profile Founded in 1989, BCD is one of the leading and most reputed Financial Services Group. SEBI accredited Merchant Banker-I and Portfolio Manager. Memberships in Five Stock Exchanges. Pan National Presence: Offices in 12 Cities and 160 associates. International presence in Singapore and Malaysia. Key Relationships
BCD - Business BCD Investment Banking Consultancy Equity Market Wealth Management Retirement Benefits Public & Private Equity Placement Debt Mobilisation Business Infrastructure Fundamental & Technical Analysis Institutional Broking PMS for HNI’s & Corporate Clients Advisory & Consultancy Intermediates
Coal India Limited (CIL) - A Schedule 'A' 'Navratna' Public Sector Undertaking establised in 1973  under Ministry of Coal, Government of India Headquartered in Kolkata, West Bengal As of March 31, 2010, it operated 471 mines in 21 major coalfields across eight states in India In 2009-10, the company reported turnover of Rs 466.7 bn and net profit of Rs 98 bn Company Profile - Overview PERFORMANCE FY 08 FY 09 FY 10 OPERATING INCOME 341875 410175 46603 EBITDA MARGIN 19.5 15.7 27.6 EPS 6.8 6.4 15.6 NET WORTH 172007 190081 258437
Production In FY10, it produced 431 Mn tonnes of coal, which accounted for 81% of the coal production in India Source: Company
IPO Process
IPO Timeline Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 Due Diligence                           Drafting of DRHP                           Resolve structural & legal issues                           Develop Positioning, Research Briefing & presentation, research report                           Review & Circular Research Reports                           File DRHP with SEBI and Stock Excanges                           SEBI Review Period and obtain Stock  Exchange Approval & IPO Grading                           Pre-Marketing                           Receive and Comply with SEBI Comments                           Filing of RHP with RoC                           Print Red Herring and Announce Floor Price                           Institutional and retail road shows                           Bidding                           Pricing & institutional Allocation                           Non- Institutional and Retail Allocation                           Listing & Trading proposals                          
India produces 90 minerals 4 fuel minerals 11 metallic  53 non-metallic and  22 minor minerals 80% of mining is in coal & 20% in various metals. Industry growth rate for 2010  - 11%. Coal is amongst prime fuels in India, has met 52.4% of India's total energy needs in fiscal 2009. Iron ore - largest exported mineral from India (55% of its total minerals exports.) From April 2009 to March 2010 Total Energy Deficit - 10.1% Peak Power Deficit -  13.3% respectively. Approx. 29.4% of the world's primary energy needs was met through coal in 2009. Indian Mining Industry at a glance Source:coal india DRHP,IBEF
Mining Industry challenges: Competitive landscape Technological challenges Infrastructure bottlenecks Investment requirements Insufficient Budget for exploration activities Procedural Bottlenecks Environmental Challenges Social Challenges Strategies: Policy Initiatives Stimulating Investment Technology Up gradation Infrastructure Development Increasing Competitiveness Strengthening Human Resources Value Addition Environment Friendly Approach CONTRIBUTION OF THE PUBLIC SECTOR:   Contributes over 85 percent of the total value of mineral production.  Public sector enterprises dominate the iron ore sector.  Coal Mining - Predominantly a public sector activity (Coal India Ltd. (CIL) accounts for 85% of total coal production). Source:IBEF,company website
SWOT Strengths: Government concessions Labours easily available Low labour and conversion costs Large quantity of high quality reserves Exports iron-ore to China and Japan on a large scale Strategic location Weakness:   Poor employee productivity Poor infrastructure facilities  Mining technology is outdated  Low innovation capabilities  Labor force is highly un-skilled  High rate of accidents  Lack of R&D programs  The Opportunities Considerable potential exists for setting up manufacturing units for value added products.  Current economic mining practices are generally limited to depths of 300 meters and 25 %of the reserves lie beyond this depth Strengthening of logistics in coal distribution Focusing on technology for future Threats:  Foreign Investment in the Mining Sector  Mining companies under the constant threat of take over by foreign companies.  A heavy tax burden discourages further investment.  Politicians undervalue the industry's contributions to the economy.  Stricter environment rules restricting mining activities Source:IBEF  report,coal india website
Globally the number of mining companies going for IPO has been high Mining companies listed on the London’s alternative market raised 958 million pounds in secondary offerings in 2009 Mining and metal companies raised $250 million in 10 IPOs and $18 billion through secondary offerings  in Australia On Toronto’s stock exchange, C$22 billion was raised via equity financing But the recent past the response towards mining companies IPO’s had  been lukewarm Recent Trends-Peers Source: Bloomberg Source: Company
NMDC – Stock Performance In March 2010, NMDC’s P/E was 48 at a price of Rs.416. Indian Peer Sesa Goa Trading at a P/E of 19, Intl. pees Rio-Tinto, BHP Billion and Vale were around 13-16. At Issue Price of Rs.300, Retail Investors Rs.285 P/E was 32 times. The slow growth in Steel Sector has been the reason for the stock not picking up. Source:  BSE Source: Zignal Particulars Amount (Rs.) Issue Price 300 Current Price (24/09) 268 High 304 Low 240 Increase/Decrease -10%
Resurgere Mines and Minerals – Stock Performance Source: BSE Source: Zignals Price Band of Rs.268-Rs.272 The issue had been during the economic  slowdown coupled with low demand for steel Issue had been subscribed 1.2 times The low current stock price is due to  stock split  Current P/E is 23.9 Particulars Amount (Rs.) Issue Price 270 Current Price (24/09) 2.30 High 155.00 Low 2.30 Increase/Decrease (20%)
Industry Overview Scrip Code Company name BSE group Market Cap (Rs. Cr.) Revenue (Rs. Cr.) PAT (Rs.cr.) Industry P/S PER 500900 STERLITE INDUSTRIES (INDIA) LTD. A / SENSEX 58,795 13,124.50 831.5 Mining 4.47979 70.7096 526371 NMDC LTD. A / BSE100 106,849 6,239.09 3,447.26 Mining 17.1257 30.9953 500295 SESA GOA LTD. A / BSE100 28,679 4,660.33 2,118.09 Iron & Steel/Interm.Products 6.15386 13.54 512579 GUJARAT NRE COKE LTD. A / BSE200 3,080 1,401.86 51.87 Coal 2.19708 59.3792 532181 Gujarat Mineral Development Corporation Ltd A / BSE200 4,285 1,065.22 279.87 Mining 4.02264 15.3107 533017 RESURGERE MINES & MINERALS INDIA LTD. B 439 528.88 27.5 Mining 0.83006 15.9636 500184 HIMADRI CHEMICALS & INDUSTRIES LTD. B / BSE500 1,849 505.93 107.34 Coal 3.65466 17.2256 527001 Ashapura Minechem Ltd B / BSE500 415 503.06 9.74 Mining 0.82495 42.6078 512369 ENNORE COKE LTD. B 162 386.92 9.24 Coal 0.41869 17.5325 504918 SANDUR MANGANESE & IRON ORES LTD. B 539 287.87 29.17 Mining 1.87237 18.4779 533016 AUSTRAL COKE & PROJECTS LTD. B 161 282.46 -4.71 Coal 0.56999 -34.183 532759 ATLANTA LTD. B 700 197.97 41.25 Construction & Engineering 3.53589 16.9697 533022 20 MICRONS LTD. B 83 176.95 7.3 Mining 0.46906 11.3699 531336 AUROMA COKE LTD. T 7 52.2 0.43 Coal 0.1341 16.2791 526662 Rajdarshan Industries Ltd T 4 2.15 0.19 Mining 1.86047 21.0526 512068 DECCAN GOLD MINES LTD. B 139 0.06 -0.59 Mining 2316.67 -235.59 513579 FOUNDRY FUEL PRODUCTS LTD. B 8 0 -0.28 Coal -28.571 512289 SHIRPUR GOLD REFINERY LTD. T 319 0 -15.58 Mining -20.475
Mining Peer Group Valuation Global Peer Details Summary Sheet Valuation
Liquidity flooding in the secondary market Improved global economic conditions Heavy investments by FIIs Fetch high valuations Brand presence Future demand supply gap Why is it the right time? How will it be beneficial?  Added leverage to buy coal mines overseas such as Rio Tinto, Hancock  and Peabody Energy. To meet the production level of 664 MTs by 2016-17. Import plans up to 8MT during 2010-11 Investments for technological advancements to develop underground mines Overseas Joint ventures to revisit abandoned mines and procure new ones Set up coal washeries to improve quality  of extracted coal ( currently 4000 kcal/kg vis-à-vis imported quality of 6000 kcal/kg
 

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Coal India Ipo

  • 1. Our People Vision – “Creating Value, Wealth and Partnerships for our Customers.” Value with Wealth BCD
  • 2. Corporate Profile Founded in 1989, BCD is one of the leading and most reputed Financial Services Group. SEBI accredited Merchant Banker-I and Portfolio Manager. Memberships in Five Stock Exchanges. Pan National Presence: Offices in 12 Cities and 160 associates. International presence in Singapore and Malaysia. Key Relationships
  • 3. BCD - Business BCD Investment Banking Consultancy Equity Market Wealth Management Retirement Benefits Public & Private Equity Placement Debt Mobilisation Business Infrastructure Fundamental & Technical Analysis Institutional Broking PMS for HNI’s & Corporate Clients Advisory & Consultancy Intermediates
  • 4. Coal India Limited (CIL) - A Schedule 'A' 'Navratna' Public Sector Undertaking establised in 1973 under Ministry of Coal, Government of India Headquartered in Kolkata, West Bengal As of March 31, 2010, it operated 471 mines in 21 major coalfields across eight states in India In 2009-10, the company reported turnover of Rs 466.7 bn and net profit of Rs 98 bn Company Profile - Overview PERFORMANCE FY 08 FY 09 FY 10 OPERATING INCOME 341875 410175 46603 EBITDA MARGIN 19.5 15.7 27.6 EPS 6.8 6.4 15.6 NET WORTH 172007 190081 258437
  • 5. Production In FY10, it produced 431 Mn tonnes of coal, which accounted for 81% of the coal production in India Source: Company
  • 7. IPO Timeline Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 Due Diligence                           Drafting of DRHP                           Resolve structural & legal issues                           Develop Positioning, Research Briefing & presentation, research report                           Review & Circular Research Reports                           File DRHP with SEBI and Stock Excanges                           SEBI Review Period and obtain Stock Exchange Approval & IPO Grading                           Pre-Marketing                           Receive and Comply with SEBI Comments                           Filing of RHP with RoC                           Print Red Herring and Announce Floor Price                           Institutional and retail road shows                           Bidding                           Pricing & institutional Allocation                           Non- Institutional and Retail Allocation                           Listing & Trading proposals                          
  • 8. India produces 90 minerals 4 fuel minerals 11 metallic 53 non-metallic and 22 minor minerals 80% of mining is in coal & 20% in various metals. Industry growth rate for 2010 - 11%. Coal is amongst prime fuels in India, has met 52.4% of India's total energy needs in fiscal 2009. Iron ore - largest exported mineral from India (55% of its total minerals exports.) From April 2009 to March 2010 Total Energy Deficit - 10.1% Peak Power Deficit - 13.3% respectively. Approx. 29.4% of the world's primary energy needs was met through coal in 2009. Indian Mining Industry at a glance Source:coal india DRHP,IBEF
  • 9. Mining Industry challenges: Competitive landscape Technological challenges Infrastructure bottlenecks Investment requirements Insufficient Budget for exploration activities Procedural Bottlenecks Environmental Challenges Social Challenges Strategies: Policy Initiatives Stimulating Investment Technology Up gradation Infrastructure Development Increasing Competitiveness Strengthening Human Resources Value Addition Environment Friendly Approach CONTRIBUTION OF THE PUBLIC SECTOR: Contributes over 85 percent of the total value of mineral production.  Public sector enterprises dominate the iron ore sector. Coal Mining - Predominantly a public sector activity (Coal India Ltd. (CIL) accounts for 85% of total coal production). Source:IBEF,company website
  • 10. SWOT Strengths: Government concessions Labours easily available Low labour and conversion costs Large quantity of high quality reserves Exports iron-ore to China and Japan on a large scale Strategic location Weakness: Poor employee productivity Poor infrastructure facilities Mining technology is outdated Low innovation capabilities Labor force is highly un-skilled High rate of accidents Lack of R&D programs The Opportunities Considerable potential exists for setting up manufacturing units for value added products. Current economic mining practices are generally limited to depths of 300 meters and 25 %of the reserves lie beyond this depth Strengthening of logistics in coal distribution Focusing on technology for future Threats: Foreign Investment in the Mining Sector Mining companies under the constant threat of take over by foreign companies. A heavy tax burden discourages further investment. Politicians undervalue the industry's contributions to the economy. Stricter environment rules restricting mining activities Source:IBEF report,coal india website
  • 11. Globally the number of mining companies going for IPO has been high Mining companies listed on the London’s alternative market raised 958 million pounds in secondary offerings in 2009 Mining and metal companies raised $250 million in 10 IPOs and $18 billion through secondary offerings in Australia On Toronto’s stock exchange, C$22 billion was raised via equity financing But the recent past the response towards mining companies IPO’s had been lukewarm Recent Trends-Peers Source: Bloomberg Source: Company
  • 12. NMDC – Stock Performance In March 2010, NMDC’s P/E was 48 at a price of Rs.416. Indian Peer Sesa Goa Trading at a P/E of 19, Intl. pees Rio-Tinto, BHP Billion and Vale were around 13-16. At Issue Price of Rs.300, Retail Investors Rs.285 P/E was 32 times. The slow growth in Steel Sector has been the reason for the stock not picking up. Source: BSE Source: Zignal Particulars Amount (Rs.) Issue Price 300 Current Price (24/09) 268 High 304 Low 240 Increase/Decrease -10%
  • 13. Resurgere Mines and Minerals – Stock Performance Source: BSE Source: Zignals Price Band of Rs.268-Rs.272 The issue had been during the economic slowdown coupled with low demand for steel Issue had been subscribed 1.2 times The low current stock price is due to stock split Current P/E is 23.9 Particulars Amount (Rs.) Issue Price 270 Current Price (24/09) 2.30 High 155.00 Low 2.30 Increase/Decrease (20%)
  • 14. Industry Overview Scrip Code Company name BSE group Market Cap (Rs. Cr.) Revenue (Rs. Cr.) PAT (Rs.cr.) Industry P/S PER 500900 STERLITE INDUSTRIES (INDIA) LTD. A / SENSEX 58,795 13,124.50 831.5 Mining 4.47979 70.7096 526371 NMDC LTD. A / BSE100 106,849 6,239.09 3,447.26 Mining 17.1257 30.9953 500295 SESA GOA LTD. A / BSE100 28,679 4,660.33 2,118.09 Iron & Steel/Interm.Products 6.15386 13.54 512579 GUJARAT NRE COKE LTD. A / BSE200 3,080 1,401.86 51.87 Coal 2.19708 59.3792 532181 Gujarat Mineral Development Corporation Ltd A / BSE200 4,285 1,065.22 279.87 Mining 4.02264 15.3107 533017 RESURGERE MINES & MINERALS INDIA LTD. B 439 528.88 27.5 Mining 0.83006 15.9636 500184 HIMADRI CHEMICALS & INDUSTRIES LTD. B / BSE500 1,849 505.93 107.34 Coal 3.65466 17.2256 527001 Ashapura Minechem Ltd B / BSE500 415 503.06 9.74 Mining 0.82495 42.6078 512369 ENNORE COKE LTD. B 162 386.92 9.24 Coal 0.41869 17.5325 504918 SANDUR MANGANESE & IRON ORES LTD. B 539 287.87 29.17 Mining 1.87237 18.4779 533016 AUSTRAL COKE & PROJECTS LTD. B 161 282.46 -4.71 Coal 0.56999 -34.183 532759 ATLANTA LTD. B 700 197.97 41.25 Construction & Engineering 3.53589 16.9697 533022 20 MICRONS LTD. B 83 176.95 7.3 Mining 0.46906 11.3699 531336 AUROMA COKE LTD. T 7 52.2 0.43 Coal 0.1341 16.2791 526662 Rajdarshan Industries Ltd T 4 2.15 0.19 Mining 1.86047 21.0526 512068 DECCAN GOLD MINES LTD. B 139 0.06 -0.59 Mining 2316.67 -235.59 513579 FOUNDRY FUEL PRODUCTS LTD. B 8 0 -0.28 Coal -28.571 512289 SHIRPUR GOLD REFINERY LTD. T 319 0 -15.58 Mining -20.475
  • 15. Mining Peer Group Valuation Global Peer Details Summary Sheet Valuation
  • 16. Liquidity flooding in the secondary market Improved global economic conditions Heavy investments by FIIs Fetch high valuations Brand presence Future demand supply gap Why is it the right time? How will it be beneficial? Added leverage to buy coal mines overseas such as Rio Tinto, Hancock  and Peabody Energy. To meet the production level of 664 MTs by 2016-17. Import plans up to 8MT during 2010-11 Investments for technological advancements to develop underground mines Overseas Joint ventures to revisit abandoned mines and procure new ones Set up coal washeries to improve quality of extracted coal ( currently 4000 kcal/kg vis-à-vis imported quality of 6000 kcal/kg
  • 17.