Short facts/Key Concerns

1
2
3
4
5
6

J&K state electricity board (JKSPDC) which has high share of hydel power in the state is activel
NTPC currently import costly thermal coal from Indonesia and seeks to eliminate import depen
NTPC is adding 8460 MW coal based capacity by the end of 12th five year plan. For this it estim
In 2013 IMC meeting of Ministry of coal, the Kudanali coal block was alloted to both NTPC and
Recently in June 2015, NTPC and JKSPDC formed a JV, other proceedings are underway current
Since both NTPC and JKSPDC do not have any expertise in mining activities the JV is likely to e

Questions answered in this study

1 How should NTPC develop the mine? Through forming a JV/SPV or through a subsidiary?

2
3
4
5
6

How was the reserve split of 266 mT for NTPC and 130 mT for JKSPDC was arrived at by IMC? T
What could be possible cost of mining (Run of the mine cost) for a MDO?
At what fixed price per ton should the MDO agree for the contract mining?
At what price per ton can JV supply coal to NTPC and JKSPDC?
Is the arrived cost of coal cheaper than imports from Indonesia?
Note: Kindly refer to comments (wherever assigned) for more explanations
*MDO: Mining developer cum operator

power in the state is actively looking for coal based power to meet the shortfall during winter seasons because
s to eliminate import dependence by acquiring captive mines.
ve year plan. For this it estimated a coal shortage of 266 mT. Going forward NTPC does not want to import coal
as alloted to both NTPC and JKSPDC (through dispensation route) to meet their respective needs.ML will only be
dings are underway currently
activities the JV is likely to employ a MDO* contract mining service. MDO is the most preffered method for mine

through a subsidiary?
DC was arrived at by IMC? Total reserve at Kudanali Luburi is 396 mT.
MDO?
mining?

r more explanations

winter seasons because river discharge is less/frozen.

not want to import coal from outside.

ve needs.ML will only be given only to the JV.

effered method for mine development and operation.

Key Assumptions/Data for Mine developer cum Operator (MDO) service provider

1
2
3
4
5
6
7
8
9
10
11

No Coal Stock deterioration during life of mine (30Yrs)

No CSR Expenses by the MDO
No other nonoperating income
Will take 3 years for mine development and then it will take 4 more years to reach full capacity
All major Overburden removal to be done in the mine development period
MDO operator's mining operations are atleast as efficient as MCL(CIL subsidiary) which does m
30% of all intial Capex is intangible assets like Reconassaince Permit, Mining license etc which
Mine closure capex is a mandatory part of the selection procedure
MDO is responsible for entire funding and operation of the mining operations in return for a fixe
Initial capex, Beta and maximum mining capacity has been estimated by taking comparable M
Working Capital remains same Y-o-Y

Key Assumptions/Data for JV between NTPC and JKSPDC

1
2
2
3
4
5
6
7

As per CIL, Mining licence will only be granted to a JV between NTPC and JKSPDC
The equity share in the JV will be in ratio of their coal share allotment (as per SBI Caps recomm
The equity share of the JV cannot be changed without prior permission from CIL (as per rule)
Since both NTPC and JKSPDC do not have any mining expertise, the JV will employ a contract b
All CSR and mandatory contributions are paid by the JV all included in 14% levy on the its reve
Cumulative levies will be regulated by CERC so as not to result in higher energy charges throug
Any quantity of coal produced in excess of sanctioned capacity(if produced) or unused due to a
Upfront payment (@10%)by JV on Coal block's intrinsic value is to be paid in 3 installments in 3

Key Assumptions/Data for NTPC

1
2
3
4
5

Already has a PPA signed with UP state electricity board for upcoming powerplant in Bailhaur
NTPC had applied for Kudanali mine to meet the forecasted coal demand at the power plant
If coal demand had not been met from Kudanali mine then NTPC would have to import coal from
The rational behing going after captive mining blocks is to have fuel supply for future
NTPC will buy 67% of the coal output from the JV

Key Assumptions/Data for JKSPDC

1 JKSPDC will buy 33% of coal output fron the JV

2 JKSPDC may set up a power plant in Orissa or transport the coal to J&K as it deems fit.

e years to reach full capacity after starting mining activity

t period
CIL subsidiary) which does mining activity in nearby Talcher Coalfield
mit, Mining license etc which are to be ammortized over life of mine operations

operations in return for a fixed price (per ton) agreement with the JV
ted by taking comparable MDO projects of Adani Enterprise

C and JKSPDC
ent (as per SBI Caps recommendations) (67:33)
sion from CIL (as per rule)
e JV will employ a contract based MDO through competitive bidding
d in 14% levy on the its revenue
higher energy charges throughout the tenure of PPA
roduced) or unused due to any reason will have to be sold to CIL.
be paid in 3 installments in 3 years consecutively

ing powerplant in Bailhaur

emand at the power plant
ould have to import coal from Indonesia since FSA with CIL is always saturated
el supply for future

J&K as it deems fit.

Mine Data

Name: Kudanali Luburi

Location: Orrissa, Near Talcher Mine
Development period (Yrs)
Life of Mine (Yrs)
Mine Reserves (mT)
Average Calorific Value of coal in block(Kcal)
Coal grade (as per calorific Value, MoC)

3
30
396
3475.89
G3

Coal Reserve allotment

NTPC (mT)
JKSPDC (mT)

266
130
Capacity sanctioned

Full capacity (TPA)

Usable coal (% of Full Capacity)
Maximum usable coal @full capacity (mT)

13.2
75%
9.9

End use

NTPC: For power generation at power plant at Bilhaur, Uttar

Pradesh (U.P)
JKSPDC: For setting up a power plant in Orissa (Expected
capacity: 660 Mw)

MDO Service provider

Input
Bid price(Rs per ton)

970
Output
IRR
21.78%
Margin of Safety
12.35%
NPV (in Crores)

2,753
Average DSCR
1.51
Other Data
Debt
80%
Equity
20%
Tax Rate
35%
Intngible assets
30%
Cost of Capital
Risk Free Rate
7.82%
Market Return
14.04%
Market Risk Premium
6.23%
Beta
1.3
Beta Asset
0.26
Cost of capital
9.43%

NTPC-JKSPDC JV

Input
Selling price (Rs per ton)
Output
IRR
Margin of Safety
NPV (In Crores)

Net profit to NTPC (per

1,400
14%
4.20%

192

Other Data
Debt
Equity
Tax Rate
Levies & misc taxes by state
Cost of Capital
Risk Free Rate
Market Return
Market Risk Premium
Beta
Beta Asset
Cost of Capital

70%
30%
35%
14%
7.82%
14.04%
6.23%
0.95
0.285
9.59%

International coal prices

Exchange Rate
Coal Price
Average Transportation cost to

Net Import Cost(at plant locati

Soo
Cost of coal (as obtained from
Transportation charge (via Rak

Sourcing from JV net cost(at p

Cost difference (Captive minin

Legend
Input
Output

Net profit to NTPC (per ton) by sourcing coal from JV in stead of importing

Import Data

nternational coal prices

xchange Rate
oal Price
verage Transportation cost to NTPC

41
65
2,661
600

et Import Cost(at plant location)

Soourcing from JV captive mine
ost of coal (as obtained from JV)
ransportation charge (via Rakes)

3,261

1,400
1,350

ourcing from JV net cost(at plant location)

2,750

511

ost difference (Captive mining-import) per ton of coal

Estimating mining cost per ton for the MDO contract using MCL as base case

About MCL:

MCL is one of the major coal mining company of India. Is is one of the subsidiaries of Coal India Limited. Last year it m
Most of the mines owned by MCL are in Orissa

From MCL FY2014 P&L statement

Expenses
1 Cost of Material Consumed
2 Employee Benefit Expenses (Salary +PPF+Misc)
3 Power and Fuel
4 Repairs (Building + Plant and machinery)
5 Haulage road + Washery plant charges
6 Other Expenses

MCL coal production (FY2014-15) mT 121

Cost per tonne(ROM) 312

Rs (In Crores)

600

1,650

130

110

800

480
Total Expenses
3,770

imited. Last year it mined 121 mT of coal and offtake was 123mT

MDO Operating Assumptions

Company Name: MDO Contractor

Development period
3
Yrs
Life of Mine
30
Yrs
Mine Reserves
396
mT
Replacement capex in every 5 yrs
80
Crores
Cost per ton (Base Price)
312
Quoted per ton price(bid Price)

970
Input
Cost of Capital
9.43%
IRR
21.78%
Margin of Safety
12.35% Output
NPV
2,753
Mine Closure Capex at the end of Mine Life. This is entirely funded through
internal accruals and is mandatory part of contract
Average DSCR

MDO structure
Debt
Equity

80%
20%

Cost of Equity
Risk Free Rate
Market Return
Market Risk Premium
Beta
Beta Asset
FY2047

FY2048

200

150

1.51

7.82%
14.04%
6.23%
1.3
0.26

DSCR

1.42

Debt Schedule(in Crores)

FY2016

FY2017

FY2018

FY2019

Debt Schedule I

Opening Balance
Interest
Principle repayment
Ending Balance
EMI

824.00
939.36 1,070.87
115.36
131.51
149.92

939.36 1,070.87 1,220.79

1,220.79
170.91
44.77
1,176.03
215.68

651.78
84.73

736.52
95.75
57.73

Debt Schedule II

Opening Balance
Interest
Principle repayment

576.80
74.98

Ending Balance
EMI

651.78

736.52

678.78
153.48

247.20
29.66
247.20

247.20
29.66
51.72
195.48
81.39

Debt Schedule III

Opening Balance
Interest
Principle repayment
Ending Balance
EMI
Net Interest Paid

154.22

64.87
19.80
84.67

Depriciation & Amortization (in Crores)

Depriciation on plant and equipments

Amortization of intangible assets
Total D&A
Extraneous Factors Assumption

Years since start of project

Mining Capacity(%)
Mining Capacity(mT per year)
Cost per ton
Increase in cost per ton of mining(y-o-y)
Discounting factor @ cost of equity

FY2016
1
0.0%
0
0

FY2017
2
0.0%
0
0

FY2018
3
0.0%
0
0

0.91

0.84

0.76

FY2019
4
60.0%
7.9
312
0.0%
0.70

Net Income for MDO

Initial Development
FY2016
2017
2018
Revenue: Mined Capacity* Price per ton
Operating expenses

Mine oprating years

2019
-

768
246.76

Gross Income
D&A

521.48
84.67

EBIT
Interest Expenses

436.81
154.22

PBT
Tax @ 34.5%

282.59
-

Net Income

282.59

282.59
84.67
154
521
364

CCF Calculation

Net Income
Add D&A
Less Capex
Less change in WC
Add Interest
CCF
Discounted cash Flow

-1,030

-1,030

-941

Project net NPV

IRR

2,753
21.78%

DSCR

-721.00
-721
-602

-309.00
-309
-236

1.42

Long Term Debt Issued(in Crores)- Term loan (In yrs)

Year
Amount
Period(Yrs)
Rate
Moratorium
1

824
15
14%
3
2

577
10
13%
2
3

247
5
12%
1
Short Term Financing
4 onwards
WC loan
Max 1 yr
9%
No
Initial Capex(in Crores)

2,060
Intangible assets

594
Working capital remains same y-o-y
Tax Rate

1.37

1.32

FY2020

1,176.03
164.64
51.03
1,124.99
215.68

1.27

FY2021

678.78
88.24
65.24

1,124.99
157.50
58.18
1,066.82
215.68

1.65

FY2022

613.54
79.76
73.72

1,066.82
149.35
66.32
1,000.49
215.68

1.45

FY2023

539.83
70.18
83.30

1,000.49
140.07
75.61
924.89
215.68

1.28

FY2024

456.52
59.35
94.13

924.89
129.48
86.19
838.69
215.68

1.12

FY2025

362.39
47.11
106.37

838.69
117.42
98.26
740.44
215.68

2.17

FY2026

740.44
103.66
112.02
628.42
215.68

256.02
33.28
120.20

135.82
17.66
135.82

1.90

FY2027

628.42
87.98
127.70
500.72
215.68

FY2028

500.72
70.10
145.58
355.15
215.68

613.54
153.48

539.83
153.48

195.48
23.46
57.93
137.55
81.39

137.55
16.51
64.88
72.67
81.39

72.67
8.72
72.67
81.39

174.20

196.78

222.29

64.87
19.80
84.67

FY2020
5
65.0%
8.6
313
0.5%
0.64

e oprating years
2020

832
268.66

64.87
19.80
84.67

FY2021
6
70.0%
9.2
315
0.5%
0.58

2021
896
290.78

456.52
153.48

64.87
19.80
84.67

FY2022
7
75.0%
9.9
316
0.5%
0.53

2022
960
313.10

362.39
153.48

169.74

64.87
19.80
84.67

FY2023
8
75.0%
9.9
318
0.5%
0.49

2023
960
314.67

256.02
153.48

192.56

64.87
19.80
84.67

FY2024
9
75.0%
9.9
319
0.5%
0.44

2024
960
316.24

135.82
153.48

218.46

64.87
19.80
84.67

FY2025
10
75.0%
9.9
321
0.5%
0.41

2025
960
317.82

0.00
153.48

247.84

64.87
19.80
84.67

FY2026
11
75.0%
9.9
323
0.5%
0.37

2026
960
319.41

127.70

145.58

64.87
19.80
84.67

64.87
19.80
84.67

FY2027
12
75.0%
9.9
324
0.5%
0.34

2027
960
321.01

FY2028
13
75.0%
9.9
326
0.5%
0.31

2028
960
322.62

563.60
84.67

605.50
84.67

647.20
84.67

645.63
84.67

644.06
84.67

642.48
84.67

640.89
84.67

639.29
84.67

637.68
84.67

478.93
174.20

520.84
196.78

562.53
222.29

560.96
169.74

559.39
192.56

557.81
218.46

556.22
247.84

554.62
127.70

553.02
145.58

304.73

324.06

340.24

391.22

366.83

339.35

308.38

426.92

407.44
-

304.73

324.06

340.24

391.22

366.83

339.35

308.38

426.92

407.44

304.73
84.67
174
564
359

340.24
84.67
222
647
344

391.22
84.67
-80.00
170
566
275

366.83
84.67
193
644
286

339.35
84.67
218
642
261

308.38
84.67
248
641
238

426.92
84.67
128
639
217

407.44
84.67
-80.00
146
558
173

1.37

324.06
84.67
###
197
606
353

1.32

1.27

1.65

1.45

1.28

1.12

2.17

1.90

1.66

1.45

FY2029

355.15
49.72
165.96
189.19
215.68

FY2030

189.19
26.49
189.19
215.68

FY2031

FY2032

FY2033

FY2034

FY2035

FY2036

FY2037

165.96

64.87
19.80
84.67

FY2029
14
75.0%
9.9
328
0.5%
0.28

2029

960
324.23

189.19

64.87
19.80
84.67

FY2030
15
75.0%
9.9
329
0.5%
0.26

2030
960
325.85

64.87
19.80
84.67

FY2031
16
75.0%
9.9
331
0.5%
0.24

2031
960
327.48

64.87
19.80
84.67

FY2032
17
75.0%
9.9
332
0.5%
0.22

2032
960
329.12

64.87
19.80
84.67

FY2033
18
75.0%
9.9
334
0.5%
0.20

2033
960
330.76

64.87
19.80
84.67

FY2034
19
75.0%
9.9
336
0.5%
0.18

2034
960
332.42

64.87
19.80
84.67

FY2035
20
75.0%
9.9
337
0.5%
0.16

2035
960
334.08

64.87
19.80
84.67

FY2036
21
75.0%
9.9
339
0.5%
0.15

2036
960
335.75

64.87
19.80
84.67

FY2037
22
75.0%
9.9
341
0.5%
0.14

2037
960
337.43

636.07
84.67

634.45
84.67

632.82
84.67

631.18
84.67

629.54
84.67

627.88
84.67

626.22
84.67

551.40
165.96

549.78
189.19

548.15

546.52

544.87

543.22

385.45

360.59

548.15

546.52

544.87

385.45

360.59

548.15

546.52

385.45
84.67
166
636
180

360.59
84.67
189
634
164

548.15
84.67
633
150

546.52
84.67
631
136

1.66

1.45

622.87
84.67

541.56

539.88

538.21
-

543.22

541.56

539.88

538.21
-

544.87

543.22

541.56

539.88

538.21

544.87
84.67
-80.00
550
108

543.22
84.67
628
113

539.88
84.67

625
94

538.21
84.67
623
86

541.56
84.67
###

626
103

624.55
84.67

FY2038

FY2039

FY2040

FY2041

FY2042

FY2043

FY2044

FY2045

FY2046

FY2047

64.87
19.80
84.67

FY2038
23
75.0%
9.9
343
0.5%
0.13

2038

960
339.11

64.87
19.80
84.67

FY2039
24
75.0%
9.9
344
0.5%
0.11

2039
960
340.81

64.87
19.80
84.67

FY2040
25
75.0%
9.9
346
0.5%
0.11

2040
960
342.51

64.87
19.80
84.67

FY2041
26
75.0%
9.9
348
0.5%
0.10

2041
960
344.23

64.87
19.80
84.67

FY2042
27
75.0%
9.9
349
0.5%
0.09

2042
960
345.95

64.87
19.80
84.67

FY2043
28
75.0%
9.9
351
0.5%
0.08

2043
960
347.68

64.87
19.80
84.67

FY2044
29
75.0%
9.9
353
0.5%
0.07

2044
960
349.42

64.87
19.80
84.67

FY2045
30
75.0%
9.9
355
0.5%
0.07

2045
960
351.16

64.87
19.80
84.67

FY2046
31
75.0%
9.9
356
0.5%
0.06

2046
960
352.92

64.87
19.80
84.67

FY2047
32
75.0%
9.9
358
0.5%
0.06

2047
960
354.68

621.19
84.67

619.49
84.67

536.52

534.82

533.12

531.41

529.69

527.96

526.22

536.52

534.82

533.12

531.41

529.69

527.96

536.52

534.82

533.12

531.41

529.69

527.96

536.52
84.67
-80.00
541
68

534.82
84.67

619
71

529.69
84.67

614
54

527.96
84.67
-80.00
533
43

617.79
84.67

533.12
84.67

618
65

616.07
84.67

531.41
84.67

616
59

614.35
84.67

612.62
84.67

610.88
84.67

605.62
84.67

524.47

522.71

520.95
-

526.22

524.47

522.71

520.95
-

526.22

524.47

522.71

520.95

526.22
84.67

611
45

522.71
84.67

607
37

520.95
84.67
-200.00
406
23

609.14
84.67

524.47
84.67

609
41

607.38
84.67

FY2048

64.87
19.80
84.67

FY2048
33
75.0%
9.9
360
0.5%
0.05

2048

960
356.46

603.84
84.67

519.18
-

519.18
-

519.18

519.18
84.67
-150.00
454
23

NTPC-JKSPDC JV Operating Assumptions

Company Name: NTPC-JKSPDC JV

Development period
Life of Mine
Mine Reserves
SG&A (as % of cost per ton)
Cost per ton to JV (Rs)
Cost of Capital
Intrinsic Value of the block
Selling Price to (NTPC+JKSPDC)
IRR
Margin of Safety
NPV

JV structure
3
30
396
2%
970
9.59%

Yrs
Yrs
mT

473
1,400
14%
4%
192.14

Input

Debt
Equity

70%
30%

Cost of Equity
Risk Free Rate
Market Return
Market Risk Premium
Beta
Asset beta

7.82%
14.04%
6.23%
0.95
0.29

Output

Debt Schedule(in Crores)

FY2016

FY2017

FY2018

FY2019

Debt Shedule I

Opening Balance
Interest
Principle repayment
Ending Balance
EMI

166
19.89
186

186
22.27
###

208

208
24.94
233

233
27.94
9.65
223.16
37.58

91.14

9.11

100.25

100.25
10.03
8.77
91.49
18.79

Debt Shedule II

Opening Balance
Interest
Principle repayment
Ending Balance
EMI

83
8.29
91.14

Debt Shedule III

Opening Balance
Interest
Principle repayment
Ending Balance
EMI
Net Interest Payment

###

83
7.46
90.31

90.31
8.13
19.75
70.56
27.88

46.09

Extraneous Factors Assumption

FY2016
0.0%
0
0.0%
1.00

Mining Capacity (%)

Mining Capacity (mT)
Price escalation Formula(Assumed cyclical)
Discounting factor @ cost of equity

FY2017
0.0%
0
0.0%
0.91

FY2018
0.0%
0
0.0%
0.83

FY2019
60.0%
7.92
0.5%
0.76

Expenses

Coal procurement from MDO

Reserve Price payable @ Rs 100 per tone
SG&A

FY2016

Net Operating expenses

FY2017
###
###
###

FY2018

FY2019

768

79

15

863

Net Income for JV

Revenue
Levies @14% of revenue
Net Operating Expenses
Gross Income

FY2016

FY2017
###

FY2018

FY2019

1,109

155

863

91

D&A
Interest Expense

46.09

EBIT
Tax @ 30%

44.67
15.64

Net Income

29.04

29.04
46.09
75.13
57.08

CCF Calculation

Net Income
Add D&A
Less capex
Add Interest
CCF
Discounted cash flow

-237
-237
-237

NPV
IRR

192.14
14%

-118
-118
-108

-118
-118
-99

Year
1
2
3

LT Debt Issued(in Crores)

Amount
Period(Yrs)
Rate

166
15
12%

83
10
10%

83
5
9%
Short Term Financing

Tax Rate
Levies

FY2020

Moratorium (in Yrs)

3
2
1

35%
14%

FY2021

FY2022

FY2023

FY2024

FY2025

223
26.78
10.80
212.36
37.58

212
25.48
12.10
200.26
37.58

200
24.03
13.55
186.70
37.58

187
22.40
15.18
171.53
37.58

172
20.58
17.00
154.52
37.58

91.49
9.15
9.64
81.84
18.79

81.84
8.18
10.61
71.24
18.79

71.24
7.12
11.67
59.57
18.79

59.57
5.96
12.84
46.73
18.79

46.73
4.67
14.12
32.61
18.79

155
18.54
19.04
135.48
37.58

FY2026

135
16.26
21.33
114.16
37.58

32.61
3.26
15.53
17.08
18.79

17.08
1.71
17.08
18.79

FY2027

114
13.70
23.89
90.27
37.58

FY2028

90
10.83
26.75
63.52
37.58

FY2029

64
7.62
29.96
33.56
37.58

70.56
6.35
21.53
49.04
27.88

49.04
4.41
23.46
25.57
27.88

25.57
2.30
25.57
27.88

42.28

38.08

33.46

FY2020
65.0%
8.58
1.0%
0.69

FY2021
70.0%
9.24
1.5%
0.63

FY2022
75.0%
9.90
1.0%
0.58

28.36

FY2023
75.0%
9.90
0.5%
0.53

25.26

FY2024
75.0%
9.90
-0.5%
0.48

21.80

FY2025
75.0%
9.90
-1.0%
0.44

17.97

FY2026
75.0%
9.90
-1.5%
0.40

13.70

FY2027
75.0%
9.90
-1.0%
0.37

10.83

FY2028
75.0%
9.90
-0.5%
0.33

7.62

FY2029
75.0%
9.90
0.5%
0.30

FY2020

832

86

17

FY2021

896

92

18

FY2022

960

99

19

FY2023

960

99

19

FY2024

960

99

19

FY2025

960

99

19

FY2026

960

99

19

FY2027

960

99

19

FY2028

960

99

19

FY2029

960

99

19

935

FY2020

1,201

168

935

98

1,007

FY2021

1,294

181

1,007

106

1,079

FY2022

1,386

194

1,079

113

1,079

FY2023

1,386

194

1,079

113

1,079

FY2024

1,386

194

1,079

113

1,079

FY2025

1,386

194

1,079

113

1,079

FY2026

1,386

194

1,079

113

1,079

FY2027

1,386

194

1,079

113

1,079

FY2028

1,386

194

1,079

113

1,079

FY2029

1,386

194

1,079

113

42.28

38.08

33.46

28.36

25.26

21.80

17.97

13.70

56.05
19.62

67.81
23.73

80.00
28.00

85.09
29.78

88.20
30.87

91.65
32.08

95.49
33.42

99.76
34.91

102.62
35.92

105.83
37.04

36.43

44.08

52.00

55.31

57.33

59.57

62.07

64.84

66.70

68.79

36.43

42.28
78.71
54.57

66.70

10.83
77.54
25.84

68.79
7.62
76.41
23.24

44.08

38.08
82.16
51.98

52.00

33.46
85.45
49.33

55.31

28.36
83.67
44.08

57.33

25.26
82.58
39.70

59.57

21.80
81.38
35.69

62.07

17.97
80.03
32.03

64.84

13.70
78.54
28.68

10.83

7.62

FY2030

34
4.03
33.56
37.58

FY2031

FY2032

FY2033

FY2034

FY2035

FY2036

FY2037

FY2038

FY2039

4.03

FY2030
75.0%
9.90
1.0%
0.28

FY2031
75.0%
9.90
1.5%
0.25

FY2032
75.0%
9.90
1.0%
0.23

FY2033
75.0%
9.90
0.5%
0.21

FY2034
75.0%
9.90
-0.5%
0.19

FY2035
75.0%
9.90
-1.0%
0.18

FY2036
75.0%
9.90
-1.5%
0.16

FY2037
75.0%
9.90
-1.0%
0.15

FY2038
75.0%
9.90
-0.5%
0.13

FY2039
75.0%
9.90
0.5%
0.12

FY2030

960

99

19

FY2031

960

99

19

FY2032

960

99

19

FY2033

960

99

19

FY2034

960

99

19

FY2035

960

99

19

FY2036

960

99

19

FY2037

960

99

19

FY2038

960

99

19

FY2039

960

99

19

1,079

FY2030

1,386

194

1,079

113

1,079

FY2031

1,386

194

1,079

113

1,079

FY2032

1,386

194

1,079

113

1,079

FY2033

1,386

194

1,079

113

1,079

FY2034

1,386

194

1,079

113

1,079

FY2035

1,386

194

1,079

113

1,079

FY2036

1,386

194

1,079

113

1,079

FY2037

1,386

194

1,079

113

1,079

FY2038

1,386

194

1,079

113

1,079

FY2039

1,386

194

1,079

113

4.03

109.43
38.30

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

71.13

73.75

73.75

73.75

73.75

73.75

73.75

73.75

73.75

73.75

71.13

4.03
75.15
20.86

73.75

73.75
9.84

73.75
73.75
8.98

73.75

73.75
18.67

73.75

73.75
17.04

73.75

73.75
15.55

73.75

73.75
14.19

73.75

73.75
12.95

73.75

73.75
11.81

73.75

73.75
10.78

FY2040

FY2041

FY2042

FY2043

FY2044

FY2045

FY2046

FY2047

FY2048

FY2040
75.0%
9.90
1.0%
0.11

FY2041
75.0%
9.90
1.5%
0.10

FY2042
75.0%
9.90
1.0%
0.09

FY2043
75.0%
9.90
0.5%
0.08

FY2044
75.0%
9.90
-0.5%
0.08

FY2045
75.0%
9.90
-1.0%
0.07

FY2046
75.0%
9.90
-1.5%
0.06

FY2047
75.0%
9.90
-1.0%
0.06

FY2048
75.0%
9.90
-0.5%
0.05

FY2040

960

99

19

FY2041

960

99

19

FY2042

960

99

19

FY2043

960

99

19

FY2044

960

99

19

FY2045

960

99

19

FY2046

960

99

19

FY2047

960

99

19

FY2048

960

99

19

1,079

FY2040

1,386

194

1,079

113

1,079

FY2041

1,386

194

1,079

113

1,079

FY2042

1,386

194

1,079

113

1,079

FY2043

1,386

194

1,079

113

1,079

FY2044

1,386

194

1,079

113

1,079

FY2045

1,386

194

1,079

113

1,079

FY2046

1,386

194

1,079

113

1,079

FY2047

1,386

194

1,079

113

1,079

FY2048

1,386

194

1,079

113

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

113.45
39.71

73.75

73.75

73.75

73.75

73.75

73.75

73.75

73.75

73.75

73.75

73.75
8.19

73.75

73.75
4.31

73.75
73.75
3.94

73.75

73.75
7.47

73.75

73.75
6.82

73.75

73.75
6.22

73.75

73.75
5.68

73.75

73.75
5.18

73.75

73.75
4.73

Rule

As per rule the intrinsic value of a coal block is to be calculated by multiplying C

the rate of return which is equal to rate of return of the mining company

From CMPDIL Data Sheet on Kudanali Luburi Block

Coal Block exploration sheet data
Seam

UHV (K.Cal./ kg)

(Range)

VI-VII-VIII
III(T)
III(M)
III(B)
II(T)
II(B)
I

1725-4525
1321-4332
1967-3845
2473-4691
2693-4594
2566-3780
3329-5726

Average UHV
(K.Cal./ kg)
(Range)

Quantity
Fraction
(in tons)

3125
2826.5
2909.5
3582
3643.5
3173
4527.5

92.18
0.23
37.61
0.09
16.5
0.04
84.38
0.21
73.73
0.19
38.04
0.10
53.56
0.14
Net Reserve(mT)
396
Average calorific value of the Kudanali Luburi Block

Coal India Notified Price (as per clorific value)

Discount Rate (JV's cost of capital)
Intrinsic value of coal block = NPV(r%, DCF(Notified Price*Mine capacity)
2016
Revenue
Revenue after discounting
NPV
Upfront payment to MoC
FY2016
FY2017
FY2018

2017

4,734.6

473
237
118
118

2018
0
-

(This is to be payed in three insta

We here assume that this amount w

e calculated by multiplying CIL notified price with mining capacity (mTPA) for each year of mine operation and t
the mining company

Average UHV
(K.Cal./ kg)
(Range)
727.43
268.45
121.23
763.26
678.37
304.80
612.36
3475.89

610
10%

e capacity)

2019
483.12
367.07

2020
523.38
362.87

2021
563.64
356.59

2022
603.90
348.63

2023
603.90
318.12

s is to be payed in three installements of 50%, 25% and 25%)

e assume that this amount will be paid in subsequent two years

2024
603.90
290.29

2025
603.90
264.89

2026
603.90
241.71

mine operation and then applying DCF at

2027
603.90
220.56

2028
603.90
201.26

2029
603.90
183.65

2030
603.90
167.58

2031
603.90
152.92

2032
603.90
139.54

2033
603.90
127.33

2034
603.90
116.19

2035
603.90
106.02

2036
603.90
96.74

2037
603.90
88.28

2038
603.90
80.55

2039
603.90
73.50

2040
603.90
67.07

2041
603.90
61.20

2042
603.90
55.85

2043
603.90
50.96

2044
603.90
46.50

2045
603.90
42.43

2046
603.90
38.72

2047
603.90
35.33

2048
603.90
32.24

Intial Capex estimation for MDO using Adani Enterprise(MDO) as e

This intial capex is used for mine development e.g Rehabilitation of PAP, Land Acquisition, R
Merrill Lynch Report on : Adani Coal Mining Projects (2012
Coal Mining Projects
Parsa-Kente Macchakata
Parsa
Basic Details
Location
Orissa
Orissa
Orissa
Area (sq km)
28
20
13
Geological Reserves (mn T)
533
1,232
210
Extractable Reserves (mn T)
452
1,170
174
Overall Stripping Ratio
4.01
2.5
6.27
Expected CoD
FY13E
FY14E
FY21E
Development
Development period (yrs)
3
3
3
Production period (yrs)
30
30
30
Production
Peak production (mn T)
15
50
5
Peak production from
FY16E
FY19E
FY24E
Washed coal as % of total coal
77.50%
72.00%
72.00%
Capex and Funding
Total capex (Rs crore)

3,000
4,900
1,120
Interest rate - Project Debt
14.00%
13.00%
12.00%
Interest rate - Working Cap Loan
10.00%
10.00%
13.00%
Beta
1.3
1.3
1.3

dani Enterprise(MDO) as example

on of PAP, Land Acquisition, Reconnaissance survey etc
oal Mining Projects (2012)
ojects
Estimations
Chendipada
Total
Kudanali Luburi
Orissa
22
1,600
1,600
2.66
FY15E

India
83
3575
3396

Orissa
6.5
396
396
3.86
FY18E

3
30
40
FY21E
72.00%

5,700
11.80%
10.00%
1.3

3
30
110

14,720

13.2
FY18E
74.75%

2,060

1.3

Description
NTPC toal coal requirement during FY2014
Split
FSA with CIL
Captive Mining
Bilateral or E-auction
Import
Total Coal Based Capacity installed till FY2014

NTPC Avg Boiler Efficiency

Typical Heat Cycle Efficiency (Two

Combined cycle(Brayton/Rankine) plants
and rest normal Rankine Cycle plant)

Plant Load Factor for FY2014

Value
178
145
3
2
28

Unit
mT
mT
mT
mT
mT

38654

MW

87.50%

35%

81.50%

Conversions
1kw hr
1Kcal
Coal Imports are likely to be
abandoned in future due to rapid
capacity addition by CIL and coal
from NTPC's captive mines
Minable coal from a mine is generally
60-70% of the total reserve

3600
4.1868

Kj/hr
Kj

Source

NTPC Coal Requirement FY2014

Business
Standard
Import; 16%

NTPC Website

Bilateral or E-auction; 1%
Captive Mining; 2%

Independent
Study report

Independent
Study report

NTPC Investor
Presentation

FSA with CIL; 81%

uirement FY2014

On Average Indian
coal is thermally
50-60% less
efficient than
imported coal
from
Australia/Indonesi
a/USA etc

1%

FSA with CIL; 81%

Average Calorific Value calculation for per KG of coal (Let's Sa

Formulae Used
A

Overall Conversion Factor

Heat input required after

considering the conversion
efficiency

=
=

Quantity of coal required for 1

Kw of electricity generation

Total Coal Required (kg)

178000000000

=
=

=
=
p is the Average calorific Value of the coal used by NTPC in 2014 (Both D
p

rific Value calculation for per KG of coal (Let's Say p Kj/kg)

Boiler Efiiciency X Heat Cycle Efficiency

30.625%

3600 Kj/hr
Overall Conversion Factor
11755

Kj/Kw hr

B
p Kj/kg
11755/p

kg

Installed capacity X 1000 X (365 X 24) X (Plant Load Factor) X C

3244012810971430
p
18224.79
Kj/Kg
4352.92
Kcal/Kg
Value of the coal used by NTPC in 2014 (Both Dosmestic + Imported)

A
B
C
D

Average Calorific Value of Domestic Coasl used by NTPC in FY 2014

Weight of Imported coal
0.16
Weight of Domestic Coal
0.84
Assume Imported Coal Calorific value to be
q
Domestion Coal Calorific Value
0.6q

Weigted average Calorific Value

4352.92

=
=

Substituting we get

Hence Domestic Coal Avg calorific value is

d by NTPC in FY 2014

Kcal/Kg
Kcal/Kg

(A X C) + (B X D)
(A X C) + (B X D)

6566.26

Kcal/Kg

3940

Kcal/Kg

NTPC coal based Project under construction

Barethi
Kudgi-I
Gadarwara
Unchachar
Bilhaur
Total Capacity addition

Capacity MW
2640
2400
1600
500
1320
8460

Coal Reserves Available

Banai
Bhalmuda
Chandrabila

Total reserve available today for new capacity addition

Production from newly allocated block to start by 2018

Reserve Quantity
629
550
550

1729

Using the same formula as described in Sheet Avg Cal Value (B20)
Assumption
Hence Calorific value of Coal
Quanntity of coal required for 1Kw

Total Coal required per year for the new capacity addition

Assuming coal mininable material to 65% of the available reserve

Total Reserve Required assuming plant life of 30 Yrs
Net Coal reserve Shortfall

Actual quantity of Coal reserve Allotted (Kudanali Luburi, Orissa)by CIL

Excess capacity of 130 mT allotted to JKSPDC as per IMC order

0)
=

We will stop importing coal. All the coal requirement will be fulfilled by FSA and Captive pro
3940 Kcal/Kg

=
=

=
=

0.713 Kg

Installed capacity X 1000 X (365 X 24) X (Plant Load Factor) X Quantity of coal requ
43.04 mTPA

66.22 mTPA
1986.62 mT

257.62

mT

266

mT

DC as per IMC order

by FSA and Captive prodection

X Quantity of coal required for 1Kw