-
RED HERRING PROSPECTUS Please read Section 60B of the Companies
Act, 1956
Dated September 28, 2010 Book Building Offer
Coal India Limited Our Company was originally incorporated as a
private limited company with the name of ‘Coal Mines Authority
Limited’, under the Companies Act, 1956, as amended (“Companies
Act”) on June 14, 1973. Subsequently, pursuant to a shareholder’s
resolution dated October 15, 1975 and approval of the Ministry of
Law, Justice and Company Affairs (letter number RD/T/5226) dated
October 21, 1975, the name of our Company was changed to ‘Coal
India Limited’ and we received a fresh certificate of incorporation
consequent upon change of name dated October 21, 1975 from the
Registrar of Companies, West Bengal (“RoC”). Thereafter, pursuant
to a resolution passed by the shareholders dated February 16, 2010
and approval of the Ministry of Coal (letter number
38038/1/96-CA-II (Vol.II)) dated July 31, 2009, our Company was
converted into a public limited company with effect from February
24, 2010. For further details in relation to corporate history of
our Company and for details of changes in the registered office of
our Company, please see the section titled “History and Certain
Corporate Matters” on pages 126 and 131 respectively.
Registered and Corporate Office: Coal Bhawan, 10, Netaji Subhas
Road, Kolkata 700 001, West Bengal; Telephone: + 91 33 2248 8099;
Facsimile: +91 33 2243 5316 Compliance Officer: Dr. H. Sarkar;
Telephone: + 91 33 2248 5123; Facsimile: +91 33 2231 5060; Email:
[email protected]; Website: www.coalindia.in
PROMOTER OF THE COMPANY: THE PRESIDENT OF INDIA, ACTING THROUGH
THE MINISTRY OF COAL, GOVERNMENT OF INDIA
PUBLIC OFFER OF 631,636,440 EQUITY SHARES OF FACE VALUE OF RS.
10 EACH (“EQUITY SHARES”) OF COAL INDIA LIMITED (“COAL INDIA” OR
“OUR COMPANY”) THROUGH AN OFFER FOR SALE BY THE PRESIDENT OF INDIA,
ACTING THROUGH THE MINISTRY OF COAL, GOVERNMENT OF INDIA (“THE
SELLING SHAREHOLDER”) FOR CASH AT A PRICE OF RS. [●]* PER EQUITY
SHARE AGGREGATING UP TO RS. [●] MILLION (THE “OFFER”). THE OFFER
COMPRISES A NET OFFER TO PUBLIC OF 568,472,796 EQUITY SHARES (“THE
NET OFFER”) AND A RESERVATION OF 63,163,644 EQUITY SHARES FOR
SUBSCRIPTION BY ELIGIBLE EMPLOYEES (“THE EMPLOYEE RESERVATION
PORTION”). THE OFFER SHALL CONSTITUTE 10.00% OF THE POST OFFER
PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY AND THE NET OFFER SHALL
CONSTITUTE 9.00% OF THE POST OFFER PAID-UP EQUITY SHARE CAPITAL OF
OUR COMPANY.
THE PRICE BAND, RETAIL DISCOUNT, EMPLOYEE DISCOUNT AND THE
MINIMUM BID LOT WILL BE DECIDED BY THE SELLING SHAREHOLDER AND OUR
COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS
(“BRLMS”) AND ADVERTISED AT LEAST TWO (2) WORKING DAYS PRIOR TO THE
OFFER OPENING DATE IN INDIAN EXPRESS (ALL EDITIONS), NEW INDIAN
EXPRESS (ALL EDITIONS), FINANCIAL EXPRESS (ALL EDITIONS),
JANSATTA (ALL EDITIONS) AND ANAND BAZAR PATRIKA, KOLKATA (REGIONAL
DAILY), EACH WITH WIDE CIRCULATION
*THE SELLING SHAREHOLDER AND OUR COMPANY IN CONSULTATION WITH
THE BRLMS MAY DECIDE TO OFFER A DISCOUNT OF RS. [●] AND RS. [●] TO
THE OFFER PRICE TO THE RETAIL INDIVIDUAL BIDDERS AND ELIGIBLE
EMPLOYEES RESPECTIVELY ("RETAIL AND EMPLOYEE DISCOUNT"). THE EXCESS
AMOUNT PAID AT THE TIME OF BIDDING SHALL BE REFUNDED TO THE RETAIL
INDIVIDUAL BIDDERS AND ELIGIBLE EMPLOYEES. THE EXCESS AMOUNT PAID
AT THE TIME OF BIDDING SHALL BE REFUNDED WITHIN 12 WORKING DAYS
FROM THE OFFER CLOSING
DATE TO THE RETAIL INDIVIDUAL BIDDERS AND ELIGIBLE EMPLOYEES. In
case of any revision in the Price Band, the Offer Period shall be
extended for a minimum three additional Working Days after such
revision of the Price Band, subject to the total Offer Period not
exceeding 10 Working Days. Any revision in the Price Band, and the
revised Bidding Period, if applicable, shall be widely disseminated
by notification to the Self Certified Syndicate Banks (“SCSBs”),
the National Stock Exchange of India Limited (the “NSE”) and the
Bombay Stock Exchange Limited (the “BSE”), by issuing a press
release and also by indicating the change on the websites of the
Book Running Lead Managers and the terminals of the other members
of the Syndicate. This Offer is being made through the Book
Building Process wherein at least 50% of the Net Offer shall be
Allotted on a proportionate basis to Qualified Institutional Buyers
(“QIBs” and such portion the “QIB Portion”). The Selling
Shareholder and our Company may, in consultation with the Book
Running Lead Managers, allocate up to 30% of the QIB Portion to
Anchor Investors (“Anchor Investor Portion”), out of which at least
one-third will be available for allocation to domestic Mutual Funds
only. In the event of under-subscription or non-allocation in the
Anchor Investor Portion, the balance Equity Shares shall be added
to the remaining QIB Portion (“Net QIB Portion”). Such number of
Equity Shares representing 5% of the Net QIB Portion shall be
available for allocation on a proportionate basis to Mutual Funds
only. The remainder of the Net QIB Portion shall be available for
allocation on a proportionate basis to QIBs, subject to valid Bids
being received from them at or above the Offer Price. In the event
of under-subscription in the Mutual Fund Portion, the balance
Equity Shares available for allocation in the Mutual Fund Portion
will be added to the Net QIB Portion and allocated proportionately
to the QIBs (including Mutual Funds) subject to valid Bids being
received from them at or above the Offer Price. Further, not less
than 15% of the Net Offer shall be available for allocation on a
proportionate basis to Non-Institutional Bidders and not less than
35% of the Net Offer shall be available for allocation on a
proportionate basis to Retail Individual Bidders, subject to valid
Bids being received from them at or above the Offer Price. Further,
63,163,644 Equity Shares shall be available for allocation on a
proportionate basis to the Eligible Employees, subject to valid
Bids being received from them at or above the Offer Price. Any
Bidder may participate in this Offer through the ASBA process by
providing the details of the respective bank accounts in which the
corresponding Bid Amounts will be blocked by the SCSBs. Specific
attention of investors is invited to the section titled “Offer
Procedure” on page 331.
RISKS IN RELATION TO FIRST OFFER This being the first public
offer of the Equity Shares of our Company, there has been no formal
market for the Equity Shares. The face value of the Equity Shares
is Rs. 10 and the Floor Price is [●] times of the face value and
the Cap Price is [●] times of the face value. The Offer Price (as
determined by the Selling Shareholder and our Company, in
consultation with Book Running Lead Managers, on the basis of the
assessment of market demand for the Equity Shares by way of the
Book Building Process and as stated in the section titled “Basis
for Offer Price” on page 43) should not be taken to be indicative
of the market price of the Equity Shares after such Equity Shares
are listed. No assurance can be given regarding an active and/or
sustained trading in the Equity Shares or regarding the price at
which the Equity Shares will be traded after listing.
GENERAL RISKS Investments in equity and equity-related
securities involve a degree of risk and investors should not invest
any funds in this Offer unless they can afford to take the risk of
losing their investment. Investors are advised to read the section
titled ‘Risk Factors’ carefully before taking an investment
decision in this Offer. For taking an investment decision,
investors must rely on their own examination of our Company and the
Offer, including the risks involved. The Equity Shares have not
been recommended or approved by the Securities and Exchange Board
of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy
of the contents of the Red Herring Prospectus. Specific attention
of the investors is invited to the section titled “Risk Factors” on
page xvi.
IPO GRADING This Offer has been graded by CRISIL Limited, ICRA
Limited and Credit Analysis & Research Limited, and has been
assigned the “CRISIL IPO Grade 5/5”, “IPO Grade 5/5” and “CARE IPO
Grade 5/5”, respectively, indicating that the fundamentals of the
Offer are strong relative to the other listed equity securities in
India. For more information on IPO grading, see the section titled
“General Information” on page 19.
THE COMPANY AND THE SELLING SHAREHOLDER’S ABSOLUTE
RESPONSIBILITY Each of the Company and the Selling Shareholder,
having made all reasonable inquiries, accept responsibility for and
confirm that this Red Herring Prospectus contains all information
with regard to the Company, the Selling Shareholder and this Offer,
which is material in the context of this Offer, that the
information contained in this Red Herring Prospectus is true and
correct in all material aspects and is not misleading in any
material respect, that the opinions and intentions expressed herein
are honestly held and that there are no other facts, the omission
of which makes this Red Herring Prospectus as a whole or any of
such information or the expression of any such opinions or
intentions, misleading, in any material respect.
LISTING The Equity Shares offered through the Red Herring
Prospectus are proposed to be listed on the NSE and the BSE. Our
Company has received in-principle approvals from the NSE and the
BSE for listing of the Equity Shares pursuant to their letters
dated August 25, 2010 and August 13, 2010, respectively. For the
purposes of this Offer, the BSE shall be the Designated Stock
Exchange.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER
Citigroup Global Markets India Private Limited 12th, Floor,
Bakhtawar Nariman Point Mumbai 400 021, Maharashtra. Telephone: +91
22 6631 9821 Facsimile : +91 22 6646 6050 Email id:
[email protected] Website:
http://www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm
Investor Grievance id: [email protected] Contact Person: Mr.
Akhilesh Poddar SEBI Registration Number: INM000010718
Deutsche Equities (India) Private Limited D B House Hazarimal
Somani Marg, Fort Mumbai 400 001, Maharashtra. Telephone: +91 22
6658 4600 Facsimile : +91 22 2200 6765 Email id:
[email protected] Website: www.db.com/India Investor Grievance
ID: [email protected] Contact Person: Mr. Ameya Deshpande SEBI
Registration Number: INM000010833
DSP Merrill Lynch Limited 8th Floor, Mafatlal Centre Nariman
Point Mumbai 400 021, Maharashtra. Telephone: +91 22 6632 8761
Facsimile : +91 22 22048518 Email id: [email protected] Website:
www.dspml.com Investor Grievance ID: [email protected]
Contact Person: Mr. N.S. Shekhar SEBI Registration Number:
INB000011625
ENAM Securities Private Limited 801/802, Dalamal Towers Nariman
Point Mumbai 400 021, Maharashtra. Telephone: + 91 22 6638 1800
Facsimile : +91 22 2284 6824 Email id: [email protected]
Website: www.enam.com Investor Grievance id: [email protected]
Contact Person: Mr. Anurag Byas SEBI Registration Number:
INM000006856
Kotak Mahindra Capital Company Limited 1st Floor, Bakhtawar 229,
Nariman Point Mumbai 400 021, Maharashtra. Telephone: +91 22 6634
1100 Facsimile +91 22 2283 7517 Email id: [email protected]
Website: www.kmcc.co.in Investor Grievance id:
[email protected] Contact Person: Mr. Chandrakant Bhole SEBI
Registration Number: INM000008704
Morgan Stanley India Company Private Limited 5 F, 55 - 56, Free
Press House Free Press Journal Marg Nariman Point Mumbai 400 021,
Maharashtra. Telephone: :+91 22 6621 0555 Facsimile +91 22 6621
0556 Email id: [email protected] Website:
www.morganstanley.com/indiaofferdocuments Investor Grievance id:
[email protected] Contact Person: Mr. Vivek Mohan
SEBI Registration Number: INM00011203
Link Intime India Private Limited C-13, Pannalal Silk Millls
Compound, L.B.S. Marg, Bhandup (West) Mumbai 400 078, Maharashtra
Telephone: +91 22 25960320 Facsimile: +91 22 25960329 E-mail id:
[email protected] Website: www.linkintime.co.in Contact
Person: Mr. Vishwas Attavar SEBI registration number:
INR000004058
OFFER PROGRAMME FOR ALL BIDDERS OFFER OPENS ON OCTOBER 18, 2010*
FOR QIBs OFFER CLOSES ON OCTOBER 20, 2010 FOR RETAIL AND
NON-INSTITUTIONAL BIDDERS (INCLUDING ELIGIBLE EMPLOYEES BIDDING
UNDER THE EMPLOYEE RESERVATION PORTION) OFFER CLOSES ON OCTOBER 21,
2010
* The Selling Shareholder may consider participation by Anchor
Investors. Anchor Investors shall bid on the Anchor Investor
Bidding Day.
-
TABLE OF CONTENTS
SECTION I – GENERAL
........................................................................................................................................I
DEFINITIONS AND
ABBREVIATIONS.............................................................................................................
I CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL AND OTHER
INFORMATION AND CURRENCY OF
PRESENTATION....................................................................................................................XI
NOTICE TO
INVESTORS................................................................................................................................
XIII FORWARD-LOOKING
STATEMENTS.........................................................................................................
XIV
SECTION II – RISK FACTORS
......................................................................................................................XVI
SECTION III –
INTRODUCTION........................................................................................................................
1
SUMMARY OF BUSINESS
.................................................................................................................................
1 SUMMARY OF
INDUSTRY................................................................................................................................
3 SUMMARY FINANCIAL INFORMATION
.......................................................................................................
5 THE
OFFER...........................................................................................................................................................
9 GENERAL
INFORMATION..............................................................................................................................
10 CAPITAL STRUCTURE
....................................................................................................................................
26 OBJECTS OF THE
OFFER.................................................................................................................................
42 BASIS FOR THE OFFER PRICE
.......................................................................................................................
43 STATEMENT OF TAX BENEFITS
...................................................................................................................
46
SECTION IV – ABOUT THE COMPANY
........................................................................................................
54
INDUSTRY OVERVIEW
...................................................................................................................................
54 OUR
BUSINESS..................................................................................................................................................
69 REGULATIONS AND POLICIES
...................................................................................................................115
HISTORY AND CERTAIN CORPORATE
MATTERS..................................................................................126
OUR MANAGEMENT
.....................................................................................................................................156
OUR PROMOTERS AND GROUP
COMPANIES..........................................................................................181
RELATED PARTY
TRANSACTIONS............................................................................................................182
DIVIDEND
POLICY.........................................................................................................................................183
SECTION V – FINANCIAL
INFORMATION................................................................................................184
FINANCIAL STATEMENTS
...........................................................................................................................184
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF
OPERATIONS...................................................................................................................................................185
FINANCIAL INDEBTEDNESS
.......................................................................................................................235
SECTION VI – LEGAL AND OTHER INFORMATION
.............................................................................240
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
......................................................240
GOVERNMENT AND OTHER APPROVALS
...............................................................................................304
OTHER REGULATORY AND STATUTORY
DISCLOSURES....................................................................309
SECTION VII – OFFER
INFORMATION......................................................................................................322
TERMS OF THE OFFER
..................................................................................................................................322
OFFER
STRUCTURE.......................................................................................................................................325
OFFER
PROCEDURE.......................................................................................................................................331
SECTION VIII – MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
.................................364
SECTION IX – OTHER INFORMATION
......................................................................................................376
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
.........................................................376
DECLARATION
...............................................................................................................................................379
ANNEXURE I – IPO GRADING REPORT OF CRISIL
LIMITED………………………………………….. ANNEXURE II – IPO GRADING REPORT OF ICRA
LIMITED…………………………………………… ANNEXURE III - IPO GRADING REPORT OF
CREDIT ANALYSIS & RESEARCH
LIMITED………………………………………………………………………………………………………….. ANNEXURE IV - AN
INDEPENDENT TECHNICAL REPORT ON THE COAL RESOURCES AND RESERVES OF
COAL INDIA LIMITED………………………………………………………………………
-
i
SECTION I – GENERAL
DEFINITIONS AND ABBREVIATIONS Unless the context otherwise
indicates, all references in this Red Herring Prospectus to “our
Company” or to “Coal India” or to “CIL” are to Coal India Limited,
a public limited company incorporated under the Companies Act and
all references in this Red Herring Prospectus to “we” or “us” or
“our” are to the Company, the Subsidiaries and the joint venture
companies, on a consolidated basis. Unless the context otherwise
indicates or requires, the following terms shall have the following
meanings in this Red Herring Prospectus. References to statutes,
rules, regulations, guidelines and policies will be deemed to
include all amendments and modifications notified thereto. Company
Related Terms
Term Description Articles or Articles of Association The
articles of association of our Company, as amended. Auditors The
auditors of our Company, being Deoki Bijay & Co., Chartered
Accountants. Board of Directors or Board or our Board
The board of directors of our Company, or a committee
thereof.
Director(s) The director(s) on our Board. Equity Shares The
equity shares of our Company of face value Rs. 10 each. Extractable
Coal Reserves According to the ISP Guideline, Extractable Coal
Reserves is the term we use to
indicate the portion of a resource for which extraction is
established to be technically and economically feasible through
mining studies (mine planning and feasibility studies).
Indicated Geological Reserves According to the ISP Guideline,
indicated geological reserves comprise that material occurring
within a radius of 1,000 meters around boreholes taken up for
regional and detailed exploration. While estimating Indicated
Geological Reserves, qualitative information obtained from the
regional exploratory boreholes are projected in the Indicated
Geological Reserve category.
Indicated Mineral Resource As classified under the JORC Code,
that part of a mineral resource for which quantity, grade or
quality, densities, shape and physical characteristics, can be
estimated with a level of confidence sufficient to allow the
appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable
exploration and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.
Inferred Geological Reserves According to the ISP Guideline,
inferred geological reserves comprise that material occurring
within the influence area of beyond 1,000 meters and up to two
kilometers from the point of observation.
Inferred Mineral Resource As classified under the JORC Code,
that part of a mineral resource for which tonnage, densities,
shape, physical characteristics, grade and mineral content can be
estimated with a low level of confidence. It is inferred from
geological evidence and assumed but not verified geological and/or
grade continuity. It is based on information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes which may be limited or of uncertain
quality and reliability.
Measured Mineral Resource As classified under the JORC Code,
that part of a mineral resource for which quantity, grade or
quality, densities, shape, physical characteristics are so well
established that they can be estimated with confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the
economic viability of the deposit. The estimate is based on
detailed and reliable exploration, sampling and testing information
gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
Memorandum or Memorandum of Association
The memorandum of association of our Company, as amended.
Probable Reserves The economically mineable part of an Indicated
Mineral Resource as classified under the JORC Code, and in some
cases Measured Mineral Resource. It includes diluting materials and
allowances for losses which may occur when material is
-
ii
Term Description mined. Appropriate assessments, which may
include feasibility studies, have been carried out, and include
consideration of and modification by realistically assumed, mining,
metallurgical, economic, marketing, legal, environmental, social
and governmental factors. These assessments demonstrate at the time
of reporting that extraction could be reasonably justified.
Proved Geological Reserves According to the ISP Guideline,
proved geological reserves represent resource base with the highest
confidence. The delineated tonnage within an area falling within a
radius of 200 meters around boreholes is categorized as Proved
Geological Reserves. Proved Geological Reserves can be produced
only on the completion of detailed exploration.
Proved Reserves The economically mineable part of a Measured
Mineral Resource as classified under the JORC Code. It includes
diluting materials and allowances for losses which may occur when
material is mined. Appropriate assessments, which may include
feasibility studies, have been carried out, and include
consideration of and modification by realistically assumed, mining,
metallurgical, economic, marketing, legal, environmental, social
and governmental factors. These assessments demonstrate at the time
of reporting that extraction could be reasonably justified.
Promoter The President of India, acting through the Ministry of
Coal, Government of India. Key Management Personnel The personnel
listed as key management personnel in the section titled “Our
Management” on page 176. Registered and Corporate Office The
registered and corporate office of our Company at Coal Bhawan, 10,
Netaji
Subhas Road, Kolkata 700 001, West Bengal. Selling Shareholder
The President of India, acting though the Ministry of Coal,
Government of India. Subsidiaries The direct and indirect
subsidiaries of our Company i.e. Bharat Coking Coal
Limited, Central Coalfields Limited, Central Mine Planning and
Development Institute Limited, Coal India Africana Limitada,
Eastern Coalfields Limited, Mahanadi Coalfields Limited, Northern
Coalfields Limited, South Eastern Coalfields Limited, Western
Coalfields Limited and MJSJ Coal Limited and MNH Shakti
Limited.
Offer Related Terms
Term Description Allot or Allotment or Allotted The transfer of
Equity Shares pursuant to this Offer. Allottee A successful Bidder
to whom an Allotment is made. Allotment Advice In relation to
Bidders other than Anchor Investors, the note or advice or
intimation
of Allotment, sent to each successful Bidder who has been or is
to be Allotted the Equity Shares after discovery of the Offer Price
in accordance with the Book Building Process, including any
revisions thereof.
Anchor Investor A Qualified Institutional Buyer, applying under
the Anchor Investor Portion, who has Bid for an amount of at least
Rs. 100 million.
Anchor Investor Bidding Day The day one day prior to the Offer
Opening Date, prior to or after which the Syndicate will not accept
any Bids from Anchor Investors.
Anchor Investor Portion Equity Shares representing up to 30% of
the QIB Portion, available for allocation to Anchor Investors at
the Anchor Investor Price in accordance with the SEBI
Regulations.
Anchor Investor Price The price at which Allotment is made to
Anchor Investors in terms of the Red Herring Prospectus, which
shall be higher than or equal to the Offer Price, but not higher
than the Cap Price.
ASBA or Application Supported by Blocked Amount
The application (whether physical or electronic) used to make a
Bid authorizing the SCSB to block the Bid Amount in the specified
bank account maintained with such SCSB.
ASBA Account Account maintained with an SCSB which will be
blocked by such SCSB to the extent of the appropriate Bid Amount in
relation to a Bid by an ASBA Bidder.
ASBA Bidders Prospective investors in this Offer who Bid/ apply
through the ASBA process. ASBA Form The form, whether physical or
electronic, in terms of which an ASBA Bidder
shall make a Bid pursuant to the terms of the Red Herring
Prospectus. ASBA Revision Form The forms used by the ASBA Bidders
to modify the quantity of Equity Shares or
the Bid Amount in any of their ASBA Forms (if submitted in
physical form). Bankers to the Offer/ Escrow Collection Banks
The banks which are clearing members and registered with SEBI,
in this case being ICICI Bank Limited, HDFC Bank Limited, Kotak
Mahindra Bank Limited, Standard Chartered Bank, Axis Bank, The
Royal Bank of Scotland N.V., Union Bank of India, Central Bank of
India,Hongkong and Shanghai Banking
-
iii
Term Description Corporation Limited, IDBI Bank Limited, State
Bank of India, United Bank of India, Bank of India and Punjab
National Bank.
Basis of Allotment The basis on which the Equity Shares will be
allocated as described in the section titled “Offer Procedure–Basis
of Allotment” on page 357.
Bid An indication by a Bidder to make an offer to subscribe for
Equity Shares in terms of the Red Herring Prospectus.
Bidder A prospective investor who makes a Bid in this Offer, and
unless otherwise stated or implied, includes an ASBA Bidder.
Bidding The process of making a Bid. Bid Amount The highest
value of the optional Bids as indicated in the Bid cum
Application
Form or ASBA Form, as the case may be. Bid cum Application Form
The form in terms of which a Bidder (other than an ASBA Bidder)
makes a Bid in
terms of the Red Herring Prospectus and which will be considered
as an application for Allotment.
Bid Price The prices indicated against each optional Bid in the
Bid cum Application Form or the ASBA Form, as the case may be.
Bidding Centres A centre for acceptance of the Bid cum
Application Form. Book Building Process The book building process
as described in Part A Schedule XI of the SEBI
Regulations. Book Running Lead Managers or BRLMs
Book Running Lead Managers to this Offer, in this case being,
Citigroup Global Markets India Private Limited, Deutsche Equities
(India) Private Limited, DSP Merrill Lynch Limited, Enam Securities
Private Limited, Kotak Mahindra Capital Company Limited and Morgan
Stanley India Company Private Limited.
CAN or Confirmation of Allocation Note
In relation to Anchor Investors, the note or advice or
intimation including any revisions thereof, sent to each successful
Anchor Investors indicating the Equity Shares allocated after
discovery of the Anchor Investor Price.
Cap Price The higher end of the Price Band, in this case being
Rs. [●], and any revisions thereof, above which the Offer Price
will not be finalized and above which no Bids will be accepted.
Controlling Branches Such branches of the SCSBs which
co-ordinate Bids under this Offer by the ASBA Bidders with the
Registrar to the Offer and the Stock Exchanges and a list of which
is available at http://www.sebi.gov.in/pmd/scsb.pdf or at such
other website as may be prescribed by SEBI from time to time.
Cut-off Price Any price within the Price Band determined by the
Selling Shareholder and our Company in consultation with the Book
Running Lead Managers, at which only the Retail Individual Bidders
and Eligible Employees are entitled to Bid.
Demographic Details The demographic details of the Bidders such
as their address, PAN, occupation and bank account details.
Depository A depository registered with SEBI under the
Securities and Exchange Board of India (Depositories and
Participants) Regulations, 1996.
Depository Participant or DP A depository participant as defined
under the Depositories Act. Designated Branches Such branches of
the SCSBs which shall collect the ASBA Forms and a list of
which is available on http://www.sebi.gov.in/pmd/scsb.pdf or at
such other website as may be prescribed by SEBI from time to
time.
Designated Date The date on which the Escrow Collection Banks
transfer and the SCSBs issue instructions for transfer of funds
from the Escrow Accounts and the ASBA Accounts, respectively, to
the Public Offer Account in terms of the Red Herring
Prospectus.
Designated Stock Exchange or DSE BSE. Draft Red Herring
Prospectus or DRHP
The draft red herring prospectus dated August 9, 2010 filed with
SEBI and issued in accordance with the SEBI Regulations.
Eligible Employees A permanent and full-time employee of our
Company and that of our Subsidiaries or a Director of our Company
(excluding such other persons not eligible under applicable laws,
rules, regulations and guidelines), as on the date of filing of the
Red Herring Prospectus with the RoC, who are Indian nationals and
are based, working and present in India as on the date of
submission of the Bid cum Application Form/ ASBA Form and who
continue to be in the employment of our Company or the
Subsidiaries, as the case may be, until submission of the Bid cum
Application Form/ ASBA Form. An employee of our Company or or a
Subsidiary who is recruited against a regular vacancy but is on
probation as on the date of submission of the Bid cum Application
Form/ ASBA Form will also be deemed a ‘permanent employee’ of our
Company or the Subsidiary as the case may be.
-
iv
Term Description Eligible NRI An NRI from such a jurisdiction
outside India where it is not unlawful to make an
offer or invitation under this Offer and in relation to whom the
Red Herring Prospectus constitutes an invitation to Bid on the
basis of the terms thereof.
Employee Discount
Discount of Rs. [●] to the Offer Price given to the Eligible
Employees.
Employee Reservation Portion The portion of the Offer being
63,163,644 Equity Shares available for allocation to Eligible
Employees.
Escrow Accounts Accounts opened for this Offer to which cheques
or drafts of the Bid Amount are issued by Bidders (excluding ASBA
Bidders).
Escrow Agreement An agreement to be entered among our Company,
the Selling Shareholder, the Registrar to the Offer, the Escrow
Collection Banks, the Book Running Lead Managers and the Syndicate
Member for the collection of Bid Amounts and for remitting refunds,
if any, to the Bidders (excluding the ASBA Bidders) on the terms
and conditions thereof.
Escrow Collection Banks The banks which are clearing members and
registered with SEBI, in this case being ICICI Bank Limited, HDFC
Bank Limited, Kotak Mahindra Bank Limited, Standard Chartered Bank,
Axis Bank, The Royal Bank of Scotland N.V., Union Bank of India,
Central Bank of India and State Bank of India.
First Bidder The Bidder whose name appears first in the Bid cum
Application Form or Revision Form or the ASBA Form or ASBA Revision
Form, as the case may be.
Floor Price The lower end of the Price Band below which no Bids
will be accepted, in this case being Rs. [●], and any revisions
thereof.
IPO Grading Agencies CRISIL Limited, ICRA Limited and Credit
Analysis & Research Limited, the IPO grading agencies appointed
by our Company for grading this Offer.
Mutual Fund Portion 5% of the Net QIB Portion or [●] Equity
Shares, available for allocation to Mutual Funds only.
Net Offer The Offer less the Employee Reservation Portion. Net
QIB Portion The QIB Portion less the number of Equity Shares
allocated to the Anchor
Investors, being a minimum of [●] Equity Shares to be allocated
to QIBs (including Mutual Funds) on a proportionate basis.
Non-Institutional Bidders All Bidders (including Sub-Accounts
which are foreign corporates or foreign individuals) who are not
Qualified Institutional Buyers, Retail Individual Bidders or
Eligible Employees Bidding under Employee Reservation Portion.
Non-Institutional Portion The portion of this Offer being not
less than 15% of the Net Offer consisting of not less than
852,709,190 Equity Shares, available for allocation to
Non-Institutional Bidders.
Offer/ Offer for Sale Public offer of 631,636,440 Equity Shares
through an offer for sale by the Selling Shareholder for cash at a
price of Rs. [●] per Equity Share, aggregating up to Rs. [●]
million, consisting of the Net Offer and the Employee Reservation
Portion.
Offer Closing Date Except in relation to Anchor Investors,
October 21, 2010. In case of QIBs, the Bidding may close one day
prior to the Offer Closing Date.
Offer Opening Date Except in relation to Anchor Investors,
October 18, 2010. Offer Period The period between the Offer Opening
Date and the Offer Closing Date (inclusive
of both days) and during which Bidders other than Anchor
Investors can submit their Bids, inclusive of any revision
thereof.
Offer Price The final price at which Allotment will be made, as
determined by the Selling Shareholder and our Company in
consultation with the Book Running Lead Managers.
Price Band The price band between the Floor Price and Cap Price,
including any revisions thereof.
Pricing Date The date on which the Offer Price is finalized by
the Selling Shareholder and our Company, in consultation with the
Book Running Lead Managers.
Prospectus The prospectus of our Company to be filed with the
RoC for this Offer on or after the Pricing Date, in accordance with
Sections 56, 60 and 60B of the Companies Act and the SEBI
Regulations.
Public Offer Account The bank account opened under Section 73 of
the Companies Act with the Banker to the Offer to receive money
from the Escrow Accounts on the Designated Date and where the funds
transferred by the SCSBs from the ASBA Accounts shall be
received.
QIBs or Qualified Institutional Buyers
Public financial institutions as defined in Section 4A of the
Companies Act, FIIs and Sub-Accounts (other than Sub-Accounts which
are foreign corporates or foreign individuals), VCFs, FVCIs
(subject to appropriate approvals received by the FVCI from the
appropriate regulatory authorities), multilateral and bilateral
financial institutions, Mutual Funds, scheduled commercial banks,
state industrial development corporations, insurance companies
registered with the IRDA,
-
v
Term Description provident funds and pension funds with a
minimum corpus of Rs. 250 million, the NIF and insurance funds set
up and managed by army, navy or air force of the Union of India,
eligible for bidding in this Offer.
QIB Portion The portion of the Offer (including the Anchor
Investor Portion) to be allocated to QIBs, being atleast
284,236,398 Equity Shares.
Qualified Purchasers or QPs Qualified Purchasers as defined in
the U.S. Investment Company Act and related rules.
Red Herring Prospectus or RHP This red herring prospectus dated
September 28, 2010 issued in accordance with Sections 56, 60 and
60B of the Companies Act and the SEBI Regulations.
Refund Account(s) The account opened with the Refund Banker(s),
from which refunds of the whole or part of the Bid Amount
(excluding the ASBA Bidders), if any, shall be made.
Refund Banker(s) The Bankers to the Offer with whom the Refund
Accounts will be opened, in this case being ICICI Bank Limited,
HDFC Bank Limited, Central Bank of India and State Bank of
India.
Registrar to the Offer Link Intime India Private Limited Retail
Discount
Discount of up to Rs. [●] to the Offer Price given to Retail
Individual Bidders.
Retail Individual Bidders Persons, including HUFs (applying
through their Karta), NRIs and ASBA Bidders, who have Bid for an
amount less than or equal to Rs. 100,000.
Retail Portion The portion of this Offer being not less than 35%
of the Net Offer, consisting of 198,965,479 Equity Shares,
available for allocation to Retail Individual Bidders on a
proportionate basis.
Revision Form The form used by the Bidders other than ASBA
Bidders to modify the quantity of Equity Shares or the Bid Price in
any of their Bid cum Application Forms or any previous Revision
Form(s), as applicable.
Self Certified Syndicate Bank or SCSB
The banks registered with SEBI under the Securities and Exchange
Board of India (Bankers to an Issue) Regulations, 1994 offering
services in relation to ASBA, including blocking of an ASBA Account
in accordance with the SEBI Regulations and a list of which is
available on http://www.sebi.gov.in/pmd/scsb.pdf.
Stock Exchanges The BSE and the NSE. Syndicate Agreement The
agreement to be entered into among our Company, the Selling
Shareholder,
the Registrar to the Offer and the Syndicate, in relation to the
collection of Bids (excluding Bids from the ASBA Bidders).
Syndicate Member Intermediary registered with the SEBI permitted
to carry out activities as an underwriter, in this case being Kotak
Securities Limited.
Syndicate or members of the Syndicate
The Book Running Lead Managers and the Syndicate Member.
Transaction Registration Slip or TRS The slip or document issued
by any of the members of the Syndicate to a Bidder as proof of
registration of the Bid.
Underwriters The Book Running Lead Managers and the Syndicate
Member. U.S. Investment Company Act U.S. Investment Company Act of
1940, as amended. U.S. Person As defined in Regulation S under the
U.S Securities Act. U.S. QIBs Qualified institutional buyers, as
defined in Rule 144A under the U.S Securities
Act. U.S Securities Act U.S Securities Act of 1933, as amended.
Working Days All days except Sunday and any public holiday, except
during the Offer Period
where a working day means all days other than a Saturday, Sunday
or a public holiday on which banks in Mumbai are open for
business.
Conventional/ General Terms/ Abbreviations and and Reference to
other Business Entities
Abbreviation Full Form AGM Annual General Meeting. AITUC All
India Trade Union Congress. Air Act Air (Prevention and Control of
Pollution) Act, 1981, as amended. AS Accounting Standards as issued
by the Institute of Chartered Accountants of
India. BCCL Bharat Coking Coal Limited. BEML BEML Limited. BICP
Bureau of Industrial Cost and Prices. BIFR Board for Industrial and
Financial Reconstruction. BMS Bhartiya Mazdoor Sangh. BSE The
Bombay Stock Exchange Limited.
-
vi
Abbreviation Full Form CAGR Compound Annual Growth Rate. CBA Act
Coal Bearing Areas (Acquisition & Development) Act, 1957, as
amended. CBI Central Bureau of Investigation. Coal Nationalization
Act Coal Mines (Nationalization) Act, 1973, as amended. Contract
Labour Act Contract Labour (Regulation and Abolition) Act, 1970, as
amended. CCL Central Coalfields Limited. CDSL Central Depository
Services (India) Limited. CEA Central Electricity Authority of
India. Citi Citigroup Global Markets India Private Limited. CITU
Confederation of Indian Trade Unions. CIAL Coal India Africana
Limitada. CMPDIL Central Mine Planning & Design Institute
Limited. CM Regulations Coal Mines Regulations, 1957. CNUL CIL NTPC
Urja Private Limited. Companies Act Companies Act, 1956, as
amended. CSR Corporate Social Responsibility. CST Central Sales Tax
Act, 1956, as amended. CVC Central Vigilance Commission.
Depositories Act Depositories Act, 1996, as amended. Deutsche
Deutsche Equities (India) Private Limited. DGMS Director General
for Mines Safety. DIN Directors Identification Number. DIPP
Department of Industrial Policy and Promotion, Ministry of Commerce
and
Industry, Government of India. DP ID Depository Participant’s
Identity. DPE Directorate of Public Enterprises. DSPML DSP Merrill
Lynch Limited. DVC Damodar Valley Corporation. EBITDA Earnings
Before Interest, Tax, Depreciation and Amortisation. ECL Eastern
Coalfields Limited. ECS Electronic Clearing System. EGM
Extraordinary General Meeting. Enam Enam Securities Private
Limited. EPS Earnings Per Share. ESI Employee’s State Insurance.
ESIC Employee’s State Insurance Corporation. FCNR Account Foreign
Currency Non-Resident Account. FDI Foreign Direct Investment, as
laid down in the Consolidated FDI Policy dated
April 1, 2010. FEMA Foreign Exchange Management Act, 1999,
together with rules and regulations
framed thereunder. FEMA Regulations Foreign Exchange Management
(Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2000. FII Foreign
Institutional Investors, as defined under the FII Regulations
and
registered with SEBI under applicable laws in India. FII
Regulations Securities and Exchange Board of India (Foreign
Institutional Investors)
Regulations, 1995. FIPB Foreign Investment Promotion Board of
the Government of India. Fiscal/ Financial Year/FY Period of twelve
months ended March 31 of that particular year, unless otherwise
stated. FVCI Foreign venture capital investor registered under
the FVCI Regulations. FVCI Regulations Securities and Exchange
Board of India (Foreign Venture Capital Investors)
Regulations, 2000. GAIL GAIL (India) Limited. GDP Gross Domestic
Product. GoI/Government of India/ Central Government
The Government of India.
GSI Geological Survey of India. HIL Hindalco Industries Limited.
HMS Hind Mazdoor Sabha. HUF Hindu Undivided Family. ICVL
International Coal Ventures Private Limited. IICM Indian Institute
of Coal Management.
-
vii
Abbreviation Full Form IFRS International Financial Reporting
Standards. Indian GAAP Generally accepted accounting principles in
India. INTUC Indian National Trade Union Congress. IOCL-IBP Indian
Oil Corporation Limited, IBP Division. IPO Initial Public Offer.
IRDA The Insurance Regulatory and Development Authority constituted
under the
Insurance Regulatory and Development Authority Act, 1999, as
amended. IT Act Income Tax Act, 1961, as amended. IT Department
Income Tax Department, GoI. JRDA Jharia Rehabilitation &
Development Authority. JSL Jindal Stainless Limited. JSERC
Jharkhand State Electricity Regulatory Commission. JSW
Collectively, JSW Steel Limited and JSW Energy Limited. Land
Acquisition Act Land Acquisition Act, 1894, as amended. Listing
Agreement Listing Agreement to be entered into by our Company with
the Stock Exchanges. Ltd. Limited. Kotak Kotak Mahindra Capital
Company Limited. Morgan Stanley Morgan Stanley India Company
Private Limited. MAMC Mining and Allied Machinery Corporation. MECL
Mineral Exploration Corporation Limited. MCL Mahanadi Coalfields
Limited. MICR Magnetic Ink Character Recognition. Mines Act The
Mines Act, 1952, as amended. Mitsui Mitsui & Co. Limited. MJSJ
MJSJ Coal Limited. MMDR Act Mines and Minerals (Development and
Regulation) Act, 1957, as amended. MoC Ministry of Coal, Government
of India. MoEF Ministry of Environment and Forest, Government of
India. MoM Ministry of Mines, Government of India. MSL MNH Shakti
Limited. Mutual Funds Mutual funds registered with the SEBI under
the Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996. N.A. Not Applicable.
NAV Net Asset Value. NCDP New Coal Distribution Policy. NCL
Northern Coalfields Limited. NEC North Eastern Coalfields, a
division of our Company. NECS National Electronic Clearing System.
NIF National Investment Fund set up by resolution F. No.
2/3/2005-DD-II dated
November 23, 2005 of Government of India published in the
Gazette of India. NLCL Neyveli Lignite Corporation Limited. NMDC
NMDC Limited. No. Number. NRE Account Non-Resident External
Account. NRI A person resident outside India, as defined under FEMA
and who is a citizen of
India or a person of Indian origin, such term as defined under
the Foreign Exchange Management (Deposit) Regulations, 2000.
NRO Account Non-Resident Ordinary Account. NR(s) or Non
Resident(s) A person resident outside India, as defined under FEMA,
including an Eligible
NRI and an FII. NSDL National Securities Depository Limited. NSE
National Stock Exchange of India Limited. NTPC NTPC Limited. OCB(s)
A company, partnership, society or other corporate body owned
directly or
indirectly to the extent of at least 60% by NRIs including
overseas trusts, in which not less than 60% of beneficial interest
is irrevocably held by NRIs directly or indirectly and which was in
existence on October 3, 2003 and immediately before such date was
eligible to undertake transactions pursuant to the general
permission granted to OCBs under FEMA.
ONGC Oil and Natural Gas Corporation Limited. p.a. Per annum.
PAN Permanent Account Number allotted under the IT Act. P/E Ratio
Price/Earnings Ratio.
-
viii
Abbreviation Full Form PLR Prime Lending Rate. P.O. Post Office.
Pvt. Private. RBI Reserve Bank of India. RCF Rashtriya Chemicals
& Fertilizers Limited. RoC Registrar of Companies, West Bengal,
located at Nizam Palace, 2nd M.S.O.
Building, 2nd Floor 234/4, Acharya J.C Bose Road, Kolkata 700
020, West Bengal.
RINL Rashtriya Ispat Nigam Limited. RoNW Return on Net Worth.
Rs./Rupees Indian Rupees. RITES RITES Limited. RTGS Real Time Gross
Settlement. SCCL Singareni Collieries Company Limited SAIL Steel
Authority of India Limited. SCRA Securities Contracts (Regulation)
Act, 1956, as amended. SCRR Securities Contracts (Regulation)
Rules, 1957. SDPL Shyam DRI Power Limited. SEBI The Securities and
Exchange Board of India constituted under the SEBI Act. SEBI Act
The Securities and Exchange Board of India Act, 1992, as amended.
SEBI Regulations The Securities and Exchange Board of India (Issue
of Capital and Disclosure
Requirements) Regulations, 2009. SECL South Eastern Coalfields
Limited. SEIAA State Level Environmental Impact Assessment
Authority. SICA The Sick Industrial Companies (Special Provisions)
Act, 1985, as amended. Sq. ft. Square foot. Sq. mt. Square meter.
SRK Collectively, SRK Mining Services (India) Private Limited and
SRK Consulting
(UK) Limited. Sub-Account Sub-accounts registered with SEBI
under the Securities and Exchange Board of
India (Foreign Institutional Investor) Regulations, 1995, other
than sub-accounts which are foreign corporates or foreign
individuals.
Takeover Regulations The Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations,
1997.
TAN Tax deduction account number allotted the IT Act. U.S./ US/
U.S.A/United States The United States of America, together with its
territories and possessions. USEPA United States Environmental
Protection Agency. U.S. GAAP Generally accepted accounting
principles in the United States of America. VCFs Venture Capital
Funds as defined and registered with SEBI under the Securities
and Exchange Board of India (Venture Capital Fund) Regulations,
1996. Water Act Water (Prevention and Control of Pollution) Act,
1974, as amended. WCL Western Coalfields Limited.
Industry Related Terms
Industry Related Terms Definition/Full Form ACQ Annual
contracted quantity. Beneficiation/washing Process for cleaning of
coal. BOM Build-own-maintain. Btu. British thermal unit. Calorific
value Amount of heat released during the combustion of a
material.
CRISIL Coal Outlook CRISIL Research, Coal Outlook: 2009 – 2010
to 2013 – 2014, Annual Review, November 2009.
CBM Coal bed methane. CMM Coal mine methane. Coal face Coal
production area in a mine. Coal tubs Small wagons used to carry
coal from the coal face to the surface. Coalfield Coal bearing land
area. Coke Solid carbonaceous material derived from destructive
distillation of low-ash, low-sulfur
bituminous coal. Coking coal Coal used for metallurgical purpose
(steel making). Continuous miners Equipment used in underground
mines. Conveyor belt Equipment used for coal transport
-
ix
Industry Related Terms Definition/Full Form CPP Captive power
plants. CRIRSCO Code Combined Reserves International Reporting
Standards Committee Code. Excavators Equipment used in opencast
mines viz shovels. Feeder breakers Coal crushing equipment. Fly ash
Ash in micro size. FOB Free-on-board Free-on-rail Goods loaded onto
wagons without charge to the buyer. Free-on-road Goods loaded onto
trucks without charge to the buyer. Froth floatation Coal washing
process. FSA Fuel supply agreement. GCV Gross calorific value.
Graders Equipment used in opencast mines including shovels. HEMM
Heavy earth moving machinery. HP Horse power, measure of mechanized
power. IPP Independent power plants. Jigs Equipment used in
production of coal.
JORC Code 2004 Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves
LOA Letter of assurance. LHD Load haul and dump, a tyre mounted
ug loading machine.
Lignite Low-rank coal with a relatively high moisture and low
heat/energy content, available in colours ranging from black to
brown.
Long wall Method of underground mining. MARC Maintenance and
repair contracts. Man days Unit of production of a person can
produce in one day. Man shift Unit of production of a person can
produce in one shift. MGR Merry go round, rail circuit. Middling
By-product obtained from washing of cooking coal. Nlw Non linked
washery. Non coking coal Thermal coal. OB Overburden. OBR
Overburden removal. OC Open cast. OTR tyres Off-the-road tyres. Pit
head Entrance to a coal mine. PPU Private power utilities. PSLW
Power support long wall. Rakes Train comprising of no. of wagons.
Rated capacity Estimated annual production capacity assessed by
CMPDIL. Raw coal Coal as produced from a mine. RFP Request for
proposal. RMR Rock mass rating. rope shovels Equipment used in
opencast mines. ROM Run - of - mine. RQF Request for qualification.
SAP System application products. SDL Side discharge loader, a
crawler under ground loading machine. Seams Coal formation strata.
Short wall Method of underground mining. Shovels Equipment used in
opencast mining. Sidings Railway low speed track section. Stripping
ratio Ratio between thickness of coal seam and above lying strata.
Surface miners Equipment used in opencast mining. Surface rights
Ownership of the surface land. Tons Metric tonnes. Topsoil
Uppermost layer of the earth. UG Under ground. UCG Underground coal
gasification. UHV Useful heat value, a measure of heat value of
coal. VAM Ventilation air methane. Wagons Container used for rail
transportation. Washeries Coal washing plants.
-
x
The words and expressions used but not defined herein shall have
the same meaning as is assigned to such terms under the Companies
Act, SEBI Act, the SCRA, the Depositories Act and the rules and
regulations made thereunder. Notwithstanding the foregoing, terms
in sections titled “Main Provisions of the Articles of
Association”, “Statement of Tax Benefits”, “Regulations and
Policies” and “Financial Statements” on pages 364, 46, 115 and 184
respectively, shall have the meanings given to such terms in these
respective sections.
-
xi
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL AND OTHER
INFORMATION AND CURRENCY OF PRESENTATION
Certain Conventions Unless otherwise specified or the context
otherwise requires, all references to “India” in this Red Herring
Prospectus are to the Republic of India, together with its
territories and possessions and all references to the “US”, the
“USA”, the “United States” or the “U.S.” are to the United States
of America, together with its territories and possessions. Unless
otherwise specified or the context otherwise requires, all
references to “tons” in this Red Herring Prospectus are to “metric
tonnes”. Reserve and Resource Information In this Red Herring
Prospectus, unless otherwise indicated, a reference to our
“resource” base information is a reference to our Measured Mineral
Resource, Indicated Mineral Resource and Inferred Mineral Resource
and a reference to our “reserve” base is a reference to our “Proved
Reserves” and "Probable Reserves" under the 2004 Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (“the JORC Code”). Additionally, a reference to our
“resources” insofar as relating to our classifications under ISP
Guidelines is a reference to our Proved Geological Reserves, our
Indicated Geological Reserves and our Inferred Geological Reserves,
and reference to our "reserves" insofar as relating to our
classification under the Indian Standard Procedure Guidelines (the
"ISP Guidelines") is a reference to our Extractable Coal Reserves
as classified under ISP Guidelines. At our request, SRK Mining
Services (India) Private Limited and SRK Consulting (UK) Limited
(collectively, "SRK"), independent mining and geological
consultancy firms, have conducted an audit on our coal resources
and reserves classified in accordance with the JORC Code as of
April 1, 2010. The report prepared by SRK dated September 25 2010
in accordance with the JORC Code (the "SRK Report") is annexed to
this Red Herring Prospectus. The SRK Report also includes a review
of our estimates of coal resources and reserves classified in
accordance with the ISP Guidelines and SRK's conclusions are set
forth in the report. SRK Mining Services (I) Private Limited and
SRK Consulting (UK) Limited are experts in relation to the SRK
Report annexed to this RHP in terms of the provisions of Companies
Act. The methodology followed for coal resource estimation and the
resource classification under the ISP Guidelines is different from,
and may not be comparable to, that followed under certain
international codes such as the the JORC Code and the Combined
Reserves International Reporting Standards Committee Code (“the
CRIRSCO Code”). For further information on resource classification
under the ISP Guidelines and reserve and resource classification
under the JORC Code and the CRIRSCO Code, see “Business – Reserve
and Resource Base Information – Presentation of Reserve and
Resource Base Information” on page 76 and the SRK Report. Financial
Information Unless indicated otherwise, the financial information
in this Red Herring Prospectus is derived from our Company’s
restated consolidated financial statements as of and for the fiscal
years ended March 31, 2006, 2007, 2008, 2009 and 2010, and for the
three month period ended June 30, 2010, prepared in accordance with
Indian GAAP and the Companies Act and restated in accordance with
SEBI Regulations, as stated in the report of our Auditors, Deoki
Bijay & Co., and included in this Red Herring Prospectus. Our
fiscal / financial year commences on April 1 and ends on March 31
of a particular year. Unless otherwise stated, references herein to
a fiscal year or a financial year or to “FY”, are to the year ended
March 31 of a particular year. There are significant differences
between generally accepted accounting principles in India ("Indian
GAAP"), International Financial Reporting Standards ("IFRS") and
generally accepted accounting principles in the United States of
America ("U.S. GAAP"); accordingly, the degree to which the Indian
GAAP financial statements included in this Red Herring Prospectus
will provide meaningful information is entirely dependent on the
reader’s level of familiarity with Indian accounting practices,
Indian GAAP, the Companies Act and the SEBI Regulations. Any
reliance by persons not familiar with Indian accounting practices,
Indian GAAP, the Companies Act and the SEBI Regulations on the
financial disclosures presented in this Red Herring Prospectus
should accordingly be limited. Our Company has not attempted to
explain these differences or quantify their impact on the financial
data included herein, and we urge you to consult your own advisors
regarding such differences and their impact on financial data.
-
xii
Unless otherwise indicated in the Red Herring Prospectus, all
figures have been expressed in millions. In the Red Herring
Prospectus, any discrepancies in any table between the total and
the sum of the amounts listed are due to rounding-off. Currency of
Presentation All references to “Rupees” or “Rs.” or “INR” are to
Indian Rupees, the official currency of the Republic of India. All
references to “$”, “US$”, “USD”, “U.S.$”, “U.S. Dollar(s)” or “US
Dollar(s)” are to United States Dollars, the official currency of
the United States of America. All references to “JPY” are to the
Japanese Yen, the official currency of Japan. All references to
“Can$” are to Canadian Dollars, the official currency of Canada.
All references to “Euros” are to the single currency of the
participating member states in the Third Stage of the European
Economic and Monetary Union of the Treaty establishing the European
Community, as amended from time to time. All references to “FF” is
to the French Franc the erstwhile currency of France.
Exchange Rates The following table sets forth, for each period
indicated, information concerning the number of Rupees for which
one US dollar could be exchanged. The row titled ‘average’ in the
table below is the average of the daily rate for each day in the
period.
Fiscal Period End (Rs.) Period Average (Rs.) 2006 44.61 44.28
2007 43.59 45.29 2008 39.97 40.24 2009 50.95 45.91 2010 45.14 47.42
April 1, 2010 to July 31, 2010 46.46 45.98
_____ Source: www.rbi.org.in Unless otherwise stated, in this
Red Herring Prospectus we have used a conversion rate of Rs. 46.60
for one U.S. Dollar, being the RBI reference rate as of June 30,
2010. Such translations should not be considered as a
representation that such U.S. Dollar amounts have been, could have
been or could be converted into Rupees at any particular rate, the
rates stated above or at all. Industry and Market Data Unless
stated otherwise, industry data used throughout this Red Herring
Prospectus has been obtained from industry publications. Industry
publications generally state that the information contained in
those publications has been obtained from sources believed to be
reliable but their accuracy and completeness are not guaranteed and
their reliability cannot be assured. Although our Company believes
that the industry data used in this Red Herring Prospectus is
reliable, neither we nor the BRLMs have independently verified such
information. Further, the extent to which the market data presented
in this Red Herring Prospectus is meaningful depends on the
reader’s familiarity with and understanding of the methodologies
used in compiling such data. There are no standard data gathering
methodologies in the industry in which we conduct our business, and
methodologies and assumptions may vary widely among different
industry sources.
-
xiii
NOTICE TO INVESTORS United States The Equity Shares have not
been recommended by any U.S. federal or state securities commission
or regulatory authority. Furthermore, the foregoing authorities
have not confirmed the accuracy or determined the adequacy of this
Red Herring Prospectus. Any representation to the contrary is a
criminal offence in the United States and may be a criminal offence
in other jurisdictions. The Equity Shares have not been and will
not be registered under the U.S. Securities Act of 1933, as amended
(the “U.S. Securities Act”) and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S.
persons (as defined in Regulation S under the U.S. Securities Act
(“Regulation S”)) except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
U.S. Securities Act and applicable state securities laws. Our
Company has not registered and does not intend to register under
the U.S. Investment Company Act of 1940, as amended (the “U.S.
Investment Company Act”) in reliance upon Section 3(c)(7) thereof.
Accordingly, the Equity Shares are being offered and sold (i) in
the United States only to, and only to U.S. persons that are,
“qualified institutional buyers” (as defined in Rule 144A under the
U.S. Securities Act (“Rule 144A”) and referred to in this Red
Herring Prospectus as “U.S. QIBs”; which, for the avoidance of
doubt, does not refer to a category of institutional investors
defined under applicable Indian regulations and referred to in the
Red Herring Prospectus as “QIBs”) that are also “qualified
purchasers” (“QPs”) (as defined in Section 2(a)(51) of the U.S.
Investment Company Act and the rules and regulations thereunder)
acting for its own account or for the account of another U.S. QIB
that is a QP (and meets the other requirements set forth herein),
in reliance on the exemption from registration under the U.S.
Securities Act provided by Rule 144A or other available exemption
and in reliance upon Section 3(c)(7) of the U.S. Investment Company
Act and (ii) outside the United States to non-U.S. persons in
reliance on Regulation S. Each purchaser of Equity Shares inside
the United States or who is a U.S. person will be required to
represent and agree, among other things, that such purchaser (i) is
a U.S. QIB and a QP; and (ii) will only reoffer, resell, pledge or
otherwise transfer the Equity Shares in an “offshore transaction”
in accordance with Rule 903 or Rule 904 of Regulation S and under
circumstances that will not require the Company to register under
the U.S. Investment Company Act. Each purchaser of Equity Shares
outside the United States that is not a U.S. person will be
required to represent and agree, among other things, that such
purchaser is a non-U.S. person acquiring the Equity Shares in an
“offshore transaction” in accordance with Regulation S. European
Economic Area This Red Herring Prospectus has been prepared on the
basis that all offers of Equity Shares will be made pursuant to an
exemption under the Prospectus Directive, as implemented in Member
States of the European Economic Area (“EEA”), from the requirement
to produce a prospectus for offers of Equity Shares. The expression
“Prospectus Directive” means Directive 2003/71/EC of the European
Parliament and Council and includes any relevant implementing
measure in each Relevant Member State (as defined below).
Accordingly, any person making or intending to make an offer within
the EEA of Equity Shares which are the subject of the placement
contemplated in this Red Herring Prospectus should only do so in
circumstances in which no obligation arises for our Company or any
of the Underwriters to produce a prospectus for such offer. None of
our Company and the Underwriters have authorized, nor do they
authorize, the making of any offer of Equity Shares through any
financial intermediary, other than the offers made by the
Underwriters which constitute the final placement of Equity Shares
contemplated in this Red Herring Prospectus.
-
xiv
FORWARD-LOOKING STATEMENTS
This Red Herring Prospectus contains certain “forward-looking
statements”. These forward-looking statements generally can be
identified by words or phrases such as “aim”, “anticipate”,
“believe”, “expect”, “estimate”, “intend”, “objective”, “plan”,
“project”, “shall”, “will”, “will continue”, “will pursue” or other
words or phrases of similar import. Similarly, statements that
describe our strategies, objectives, plans or goals are also
forward-looking statements. All forward-looking statements are
subject to risks, uncertainties and assumptions about us that could
cause actual results to differ materially from those contemplated
by the relevant statement. Actual results may differ materially
from those suggested by the forward looking statements due to risks
or uncertainties associated with our expectations with respect to,
but not limited to, regulatory changes pertaining to mining
industries and our ability to respond to them, our ability to
successfully implement our strategy, our growth and expansion,
technological changes, our exposure to market risks, general
economic and political conditions which have an impact on our
business activities or investments, the monetary and fiscal
policies, inflation, deflation, unanticipated turbulence in
interest rates, foreign exchange rates, equity prices or other
rates or prices, the performance of the financial markets in India
and globally, changes in domestic laws, regulations and taxes.
Important factors that could cause actual results to differ
materially from our expectations include, but are not limited to,
the following: • our estimates of our reserves and resources; •
supply and demand changes in coal and power markets; • claims
against us due to an environmental disaster, mining accidents or
any other uninsured event; • our ability to timely acquire the
mining leases and land for our mining projects; • our obtaining the
necessary environmental, forest and other approvals in a timely
manner; • risks inherent to coal mining, including geologic
conditions or equipment problems; • law and order problems; •
long-term fuel supply arrangements; • reduction in the use of coal
as a fuel source for power generation; • the unavailability of
materials, equipment (including heavy earthmoving machinery) or
other critical
supplies such as tyres and explosives, fuel, lubricants and
other consumables of the type, quantity and/or size required to
meet production expectations;
• our production and transportation capabilities; • our
rehabilitation and resettlement estimates; • the unavailability of
skilled and qualified labor and contractors; • replacement of our
coal reserves; • our plans and objectives for future operations and
expansion; • the effectiveness of our cost-control measures; • our
relationship with, and other conditions affecting, our customers; •
adverse weather and natural disasters, such as heavy rains,
flooding and other natural events affecting
operations, transportation or customers; • environmental laws,
including those affecting our customers’ coal usage; • regulatory
and court decisions; • future legislation, including regulations
and rules as well as changes in enforcement policies; • changes in
laws, policies, regulations including environmental and labor
regulations and compliance
costs, taxation or accounting standards or practices that apply
to our business, our customers and suppliers, and our ability to
respond to them;
• substantial reliance on Government-owned and
Government-controlled entities for revenue; • general economic and
business conditions in India and elsewhere and particularly the
coal industry in
India; and • changes in the political and social conditions in
India and other countries. For further discussion of factors that
could cause our actual results to differ from our expectations, see
“Risk Factors”, “Business” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”
beginning on pages xvi, 69 and 185. By their nature, certain market
risk disclosures are only estimates and could be materially
different from what actually occurs in the future. As a result,
actual future gains or losses could materially differ from those
that have been estimated. Neither our Company, our Directors, nor
any of the Underwriters nor any of their respective affiliates has
any obligation to update or otherwise revise any statements
reflecting circumstances arising after the date hereof. In
accordance with SEBI requirements our
-
xv
Company and the BRLMs will ensure that investors in India are
informed of material developments until the time of the grant of
listing and trading permission by the Stock Exchanges.
-
xvi
SECTION II – RISK FACTORS
An investment in equity shares involves a high degree of risk.
You should consider all the information in this Red Herring
Prospectus, including the risks and uncertainties described below,
before making an investment in our Equity Shares. If any of the
following risks or any of the other risks and uncertainties
discussed in this Red Herring Prospectus actually occur, our
business, financial condition and results of operations could
suffer, the trading price of our Equity Shares could decline, and
you may lose all or part of your investment. These risks and
uncertainties are not the only issues that we face. Additional
risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also have an adverse effect
on our business, results of operations and financial condition. The
financial and other related implications of risks concerned,
wherever quantifiable, have been disclosed in the risk factors
below. However, there are risk factors the potential effect of
which are not quantifiable and therefore no quantification has been
provided with respect to such risk factors. In making an investment
decision, prospective investors must rely on their own examination
of our Company and the terms of this Offer, including the merits
and risks involved. Unless otherwise stated, the financial
information of our Company used in this section is derived from our
audited consolidated financial statements under Indian GAAP, as
restated. INTERNAL RISKS Risk Factors relating to our Business and
Operations 1. Our Company, our Directors and our Subsidiaries are
involved in a number of legal proceedings
including criminal proceedings which, if determined against us,
may have a material adverse impact on our financial condition and
results of operations.
Our Company, certain of our Directors and our Subsidiaries are
involved in a number of outstanding legal proceedings, including
criminal legal proceedings and other proceedings such as public
interest litigations, land acquisition proceedings and title
disputes relating to land, civil suits (including eviction suits),
arbitration proceedings, consumer cases, service and employee
grievances and labour disputes, royalty and surface rents, consumer
proceedings and mine safety and accident-related proceedings. These
proceedings are presently pending at different levels of
adjudication before various courts, tribunals, enquiry officers,
appellate tribunals and other adjudicatory authorities and fora.
Should any new developments arise, such as change in Indian law or
rulings against us by appellate courts or tribunals, we may need to
make provisions in our financial statements, which could increase
our expenses and our liabilities. We cannot assure you that these
legal proceedings will be decided in our favour, our Directors or
our Subsidiaries. Any adverse decision may have a material adverse
effect on our business, reputation, financial condition and results
of operations and cash flow. We have provided a summary of such
outstanding legal proceedings hereunder, including particulars to
the extent ascertainable. For further details, see the section
titled “Outstanding Litigation and Material Developments” beginning
on page 240. Criminal Proceedings involving Our Company, our
Directors and our Subsidiaries as on September 10, 2010 A. Our
Company
Criminal proceedings initiated against our Company Set forth
below is a tabular summary of the outstanding criminal proceedings
initiated against our Company:
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. million approx) only in matters where
amount could be
ascertained 1 Litigation in courts 3 Not applicable 2 Litigation
before government/regulatory authorities Nil Not applicable 3 Other
litigation Nil Not applicable
-
xvii
For further details of the criminal proceedings initiated
against our Company, see the section titled “Outstanding Litigation
and Material Developments” beginning at page 241. Criminal
proceedings initiated by our Company Set forth below is a tabular
summary of the outstanding criminal proceedings initiated by our
Company:
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. million approx) only in matters where
amount could be
ascertained 1 Litigation in courts 2 Not applicable 2 Litigation
before government/regulatory authorities Nil Not applicable 3 Other
litigation Nil Not applicable
For further details of the criminal proceedings initiated by our
Company, see the section titled “Outstanding Litigation and
Material Developments” beginning at page 249. B. Our Directors
Criminal proceedings Initiated against our Directors There are no
criminal proceedings initiated against our Directors. Criminal
proceedings initiated by our Directors Set forth below is a tabular
summary of the outstanding criminal proceedings initiated by our
Directors:
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. million approx) only in matters where
amount could be
ascertained 1 Litigation in courts 1 Not applicable 2 Litigation
before government/regulatory authorities Nil Not applicable 3 Other
litigation Nil Not applicable
For further details of the criminal proceedings initiated by our
Directors, see the section titled “Outstanding Litigation and
Material Developments” beginning at page 250. C. Our Subsidiaries
Criminal proceedings initiated against our Subsidiaries Set forth
below is a tabular summary of the outstanding criminal proceedings
initiated against our Subsidiaries:
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. million approx) only in matters where
amount could be
ascertained 1 Litigation in courts 346 Not applicable 2
Litigation before government/regulatory authorities Nil Not
applicable 3 Other litigation Nil Not applicable
For further details of the criminal proceedings initiated
against our Subsidiaries, see the section titled “Outstanding
Litigation and Material Developments” beginning at page 251.
Criminal proceedings initiated by our Subsidiaries Set forth below
is a tabular summary of the outstanding criminal proceedings
initiated by our Subsidiaries:
-
xviii
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. million approx) only in matters where
amount could be
ascertained 1 Litigation in courts 135 Not applicable
2 Litigation before government/regulatory authorities
Nil Not applicable
3 Other litigation 301 Not applicable For further details of the
criminal proceedings initiated by our Subsidiaries, see the section
titled “Outstanding Litigation and Material Developments” beginning
at page 251. Other Proceedings involving Our Company, our Directors
and our Subsidiaries as on September 10, 2010 A. Our Company
Other proceedings initiated against our Company Set forth below
is a tabular summary of the legal proceedings (excluding criminal
legal proceedings) initiated against our Company:
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. million approx) only in matters where
amount could be
ascertained 1 Tax cases 12 25,621.39 2 Civil suits 200 489. 03 3
Arbitration matters 16 464.23 4 Notices received 2 24.94 5 Land
cases 15 2 7 Public interest litigation 9 Not ascertainable 8
Service matters 236 Not ascertainable 9 Consumer cases 8 Not
ascertainable 10 Other Miscellaneous cases 37 Not ascertainable
For further details of the legal proceedings initiated against
our Company, see the section titled “Outstanding Litigation and
Material Developments” beginning at page 240. Other Proceedings
Initiated by our Company There are nine civil suits initiated by
our Company pending before various forums. The amounts involved in
these cases is not ascertainable. For further details of the legal
proceedings initiated by our Company, see the section titled
“Outstanding Litigation and Material Developments” beginning at
page 241. Our Directors Other than the criminal proceedings
initiated by our Directors as summarized above, there are no other
legal proceedings pending by or against our Directors. B. Our
Subsidiaries Other proceedings initiated against our Subsidiaries
Set forth below is a tabular summary of the legal proceedings
(excluding criminal legal proceedings) initiated against our
Subsidiaries.
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. Million approx) only in matters where
amount could be ascertained
1 Tax cases 1525 51,426.41 2 Notices 136 7,244.67 3 Arbitration
matters 407 2,308.36
-
xix
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. Million approx) only in matters where
amount could be ascertained
4 Civil suits 2027 1,028.81 5 Land cases 3091 687.55 6 Motor
accident 94 103.91 7 Service matters 5758 76.93 8 Consumer cases
257 6.34 9 Public interest litigation 36 Not ascertainable 10
Environment and forests 22 Not ascertainable 11 Right to
information cases 46 Not ascertainable 12 Mine accident and safety
cases 22 Not ascertainable 13 Regulatory matter 1 Not ascertainable
14 Contempt proceedings 5 Not ascertainable 15 Pre-nationalisation
cases 4 Not ascertainable 16 Others 215 Not ascertainable
For further details of the legal proceedings initiated against
our Subsidiaries, see the section titled “Outstanding Litigation
and Material Developments” beginning at page 251. Other proceedings
initiated by our Subsidiaries Set forth below is a tabular summary
of the legal proceedings (excluding criminal legal proceedings)
initiated by our Subsidiaries:
S. No. Nature of the cases/ claims No. of cases outstanding
Amount involved (Rs. Million approx) only in matters where
amount could be ascertained
1 Civil suits 164 2,061.30 2 Arbitration matters 17 882.72 3
Environment and forests 6 873.80 4 Anti-dumping 1 Not ascertainable
5 Pre-nationalisation cases 1 Not ascertainable
For further details of the legal proceedings initiated by our
Subsidiaries, see the section titled “Outstanding Litigation and
Material Developments” beginning at page 251. 2. Information
relating to our reserve and resource base included in this Red
Herring Prospectus are
estimates, and our actual production, revenues and expenditure
with respect to our reserves and resources may differ materially
from these estimates. Additionally, certain reserve and resource
base information provided in this Red Herring Prospectus has been
prepared and classified in accordance with ISP Guidelines, which
has not been audited by SRK and differs from international
standards such as JORC.
Our future performance depends on, among other things, the
accuracy of our estimates of our reserve and resource base. We base
our estimates of our reserve and resource base on geological,
engineering and economic data collected and analyzed by our
wholly-owned subsidiary CMPDIL and our internal team of geologists
and mining engineers. We prepare and classify our estimates of
reserves and resources in accordance with the Indian Standard
Procedure guidelines (the "ISP Guidelines") and have included our
estimates of reserves and resources under ISP Guidelines in this
Red Herring Prospectus. The methodology followed for coal resource
estimation and the resource classification under the ISP Guidelines
is different from, and may not be comparable to, that followed
under certain international codes such as the 2004 Australasian
Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (the "JORC Code") and the Combined Reserves
International Reporting Standards Committee Code (the "CRIRSCO
Code"). For a comparison on the JORC Code and ISP Guidelines, see
"Business – Reserve and Resource Base Information – Comparison
between the JORC Code and ISP Guidelines" on page 76. Accordingly,
the degree to which the reserve and resource estimates included in
this Red Herring Prospectus prepared in accordance with ISP
Guidelines will provide meaningful information is entirely
dependent on the reader’s level of familiarity with the the ISP
Guidelines. We intend to continue to follow the ISP Guidelines for
such reserve base estimation and reporting as a listed company
following this Offer. Consequently, your ability to evaluate our
reserve and resource base following this Offer will continue to
dependent upon your familiarity with the ISP
-
xx
Guidelines. As a result, any estimates of reserves and resources
that we may prepare following this Offer may not provide you with a
basis for comparison of our estimated reserve and resource base
with that of other listed mining companies. At our request, SRK
Mining Services (India) Private Limited and SRK Consulting (UK)
Limited (collectively, "SRK"), independent mining and geological
consultancy firms, have conducted an audit on our coal resources
and reserves classified in accordance with the JORC Code as of
April 1, 2010. The report by SRK dated September 25, 2010 in
accordance with the JORC Code (the "SRK Report") is annexed to this
Red Herring Prospectus. The SRK Report also includes a review of
our estimates of coal resources and reserves classified in
accordance with the ISP Guidelines and SRK's conclusions are set
forth in the report. In addition, the reserve and resource
information included in this Red Herring Prospectus is not intended
to comply with, the reporting requirements of the United States
Securities Exchange Commission. In particular, Industry Guide 7
under the Securities Act does not permit the inclusion of estimates
of resources in registration statements filed under that Act.
Consequently, the reserve and resource estimates contained in this
Red Herring Prospectus are not comparable to those that contained
in registration statements filed with the the Securities Exchange
Commission of the United States and undue reliance should not be
placed on our estimates of resources by investors that are not
familiar with resource classifications under JORC. There are
various factors and assumptions inherent in the estimation of our
reserve and resource base and the cost associated with mining such
reserves that may materially differ from actual production,
revenues and expenditure with respect to our reserves. These
factors and assumptions include: interpretation of geological and
geophysical data; geological and mining conditions, which may not
be fully identified by available exploration data and/or may differ
from our experiences in areas where we currently mine; quality of
the coal and the percentage of coal ultimately recoverable; the
assumed effects of regulation, including the issuance of required
permits, and taxes, including royalties, and other payments to
governmental agencies; assumptions concerning the timing for the
development of the reserves; and assumptions concerning equipment
and productivity, future coal prices, operating costs, including
for critical supplies such as fuel, tires and explosives, capital
expenditures and development and reclamation costs. Many of the
factors, assumptions and variables involved in estimation of our
reserve and resource base are based on data that are currently
available and subject to variations over time. Reserve estimation
is a subjective process of estimating deposits of minerals that
cannot be measured in an exact manner, and the accuracy of any
reserve estimate is a function of the quality of available data and
engineering and geological interpretation and judgment. Estimates
of different engineers may vary, and results of our mining and
production subsequent to the date of an estimate may lead to
revision of estimates. Results of drilling, testing and production
subsequent to the date of such estimates may require revisions in
our reserve and resource data. In addition, there can be no
assurance that all our reserves can be economically exploited. As
of April 1, 2010, we had 92 legacy mines that we acquired at the
time of nationalization of the coal industry in India. Reserves and
resources attributable to the legacy mines, except to the extent
expressly provided to the contrary, are not included in the reserve
and resource estimates prepared under the JORC Code included in the
Red Herring Prospectus. For details, see section 9.4 of the SRK
Report. No information relating to our reserve and resource base
included in this Red Herring Prospectus should be interpreted as
assurance of the economic lives of our coal reserves and resources
or the profitability of our future operations. Any material
inaccuracy in, or future variations from, our estimates related to
our reserves and resources could result in decreased profitability
from lower than expected revenues