Coal India's targeted price hike unlikely to impact power utilities

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1 Coverage on S potlight Coal India's targeted price hike unlikely to impact power utilities Coal India Limited (CIL) has increased the prices of different grades of coking and non-coking coal with effect from February 28, The price revision comes sixteen months after the last round of revision in October, What makes the current round of price revision unique is the differential pricing that CIL has adopted, setting varying prices based on end-user industries. As a result, while the power utility, fertilizers, and defence sectors will witness only a marginal rise in coal prices, all other sectors essentially cement, sponge iron, steel, aluminium, and all other industries that procure coal for captive power generation would experience a per cent rise in coal prices. In this report, we assess the impact of this price revision on the raw material costs and profitability of the various end-use sectors.

2 O Summary Demand pinion Region-Wise Demand What is the outlook on demand for cement at the pan-india level and regional level for the next 5 years? Segment-Wise Demand What is the break-up of cement demand by end-user segments? What is the break-up of cement demand for infrastructure segment? What is the research methodology used for arriving at the end-user demand estimates? Supply Capacity Additions How much capacity is expected to be added over the next 5 years? What is the region-wise break-up of capacity additions? Blending How has the blending ratio and the share of blended cement been over the past few years? Operating Rates What is the outlook on operating rates in the cement sector at a pan-india level over the next 5 years? What is the regional outlook on operating rates in the cement sector over the next 5 years?

3 Prices Long Term Outlook What is outlook on cement prices at a pan-india level and regional level over the next 2 years? Short Term Outlook What is the outlook on cement prices at pan India level as well as regional level for the next month? Costs & Profitability What is the outlook on cost and profitability of cement players in the near term?

4 I ndustry Information Evolution of the Industry How has the cement industry evolved following the commencement of cement production in India? What are the significant milestones that have occurred during the evolution of the cement industry? Manufacturing Process What are the different stages of manufacturing cement? What are the different types of processes used in manufacturing cement? Industry Structure What is the structure of the Indian cement industry and how has it evolved over the last 10 years? Regional scenario North What is the capacity, production and operating rate of the Northern region and how has it has moved over the last few years? What are the drivers of demand for cement? South What is the capacity, production and operating rate of the southern region and how has it has moved over the last few years? Which are the key markets and who are the key players in the cement sector? What are the drivers of demand for cement in the southern region? East What is the production capacity and operating rate of the eastern region and how has it moved over the last few years?

5 What are the drivers of demand for cement in the eastern region? West What is the capacity, operating rate and production of the Western region and how it has moved over the last few years? What are the demand drivers in the region? Central What is the production, operating rate and capacity of the Central region and how has it moved over the last few years? What are the drivers of demand for cement? Demand dynamics What are the factors influencing demand for cement? Which factors affect domestic supply? Is demand for cement cyclical or regional in nature? Is the cement industry cyclical in nature? Cost structure What are the major costs associated with cement production and what is their proportion? Types of cement Which are the different types of cement and what are their characteristics? How has the product mix changed in the last few years? Ready mix concrete What is RMC and what are the factors that influence demand for RMC? What are the processes involved in manufacturing RMC? What are the types and advantages of RMC? RMC market in India.

6 P layer Profiles o ACC Ltd o Ambuja s Ltd o Grasim Industries Ltd o India s Ltd o Jaiprakash Associates Ltd o Madras s Ltd o Shree Ltd o Ultratech Ltd o Binani Ltd o Birla Corporation Ltd o Dalmia Bharat Ltd D ata and Statistics o Demand Supply o Prices o Costs o Profitability o Duties and Tarrifs o Financials

7 I mpact Analysis CIL price hike How much did CIL hike domestic coal prices in February, 2011? What has been the impact of the price hike on CIL and the end-consumer sectors like power, steel etc? T hematic Studies Benchmarking of companies Ranking of cement players based on parameters like scale, operational efficiency, market position and financial performance Captive power generation Current scenario What are the sources of captive power generation? What is the total installed capacity for captive power generation in the cement industry? Why is captive power preferred over grid power by cement players? Captive capacity additions What is the estimated captive power capacity to be installed over the next 3 years? What is the estimated investment in these capacities? What is the estimated distribution of future capacities among the large-sized, midsized and small-sized players? What is the likely trend in dependence on captive power over the next 3 years? Impact on profitability What is the estimated annual cost savings for the cement industry due to increased usage of captive power? What is the estimated impact on operating efficiency due to higher dependence on captive power?