Gujarat NRE shareholders have been warned any further investment in the troubled mining company is "highly speculative" and "not risk free".
As the miner seeks to raise a total of $108 million to repay creditors, pay wages and keep its Russell Vale and Wongawilli mines operative, new chairman Jasbir Singh has been forced to expose more than a dozen serious financial risks facing his company.
Among these are claims from creditors totalling more than $46.5 million, as well as doubt over Gujarat's ability to survive the next 12 months.
In a prospectus issued to shareholders and lodged with the Australian Securities Exchange regarding the company's latest fund-raising bid, Mr Singh also outlined Jindal Steel's future plans for the Illawarra collieries for the first time.
He said Jindal was "supportive of the company's current direction" and did not plan to make any major changes.
However, Mr Singh said Jindal's intentions could change if "circumstances change or new information becomes available".
Jindal last week increased its shareholdings in Gujarat, buying about 726 million new shares for $58 million through an advanced version of the offer now open to other shareholders.
Remaining investors are able to take up their part of the deal to buy two shares for every three they already hold at 8¢ a share, allowing an extra $49 million to be raised.
However, in the prospectus, Mr Singh sets out a series of legal challenges and financial issues that continue to dog the mining company.
Among these risks is the possibility Gujarat may not survive the next 12 months because of "serious matters facing the company at the moment with its creditors", he said.
Creditors have lodged more than $46.5 million in claims against Gujarat, including letters of demand, statutory demands and formal court proceedings.
Multiple creditors have launched legal action against Gujarat chasing unpaid debts totalling $19.17 million, while RUS Mining Supplies' winding-up proceedings are over debts of $4.2 million, the documents reveal.
The winding-up case is due to be heard in the NSW Supreme Court tomorrow, although according to Mr Singh, RUS Mining has applied to withdraw the proceedings.
However, the Deputy Commissioner of Taxation and Singaporean company UIL have stated their intention to support the order, meaning it could still go ahead.
Gujarat "remains in discussions" with these parties to resolve the matter, Mr Singh said.
Other risks outlined in the documents include the possibility of inaccurate estimates of coal reserves and decreased coal production, and the potential for significant share dilution and possible financial stress caused by the company's inability to recover more than $60 million from former chairman Arun Jagatramka's Indian company Gujarat NRE Coke.
The prospectus says the Illawarra company is exploring all options to recover the funds from Mr Jagatramka's company, which are owed from coal sales.
Despite the ongoing financial issues, Mr Singh said he and other Gujarat directors remained "hopeful" they could "move forward for the benefit of shareholders and creditors alike" by successfully resolving the problems the company faced.
The offer of new shares closes on December 17.