Coal India Limited violating statutory provisions: Report

The maharatna company hides information from investors and regulators, as per a report released by Greenpeace

geetanjali

Geetanjali Minhas | September 24, 2013



World’s largest coal producing company Coal India Limited is misleading investors despite operating on a shortfall of 16percent coal reserves. As per the report “Coal India: Running on Empty?” released by Greenpeace India yesterday, the company has failed to disclose to the stock exchanges its internal assessment of minus 16% of its extractable coal reserves at the time of its listing in 2010, violating stock exchange rules.

Concealing true level of its extractable reserves as it prepares to sell additional shares to international investors the coal behemoth is violating statutory provisions of SEBI, listing agreement under Securities Contracts Regulations Act, 1956, and SEBI’s April 3, 2006 circular relating to disclosure of material events.

Furthermore, misleading its investors the study points out that as per Coal India’s own website it claims to have extractable coal reserves of 21.7 billion tonnes (under the archaic Indian Standard Procedure system), when as a combined review of its internal documents by Greenpeace and the Institute for Energy Economics and Financial Analysis (IEEFA) showed that as per United Nations Reserve Classification System (UNRCS), the company has only 18.2 billion tonnes of extractable under the internationally recognized UNFC system. Government of India had taken a decision in 2001 to switch to the UNFC system. “At targeted production rates, these reserves could be exhausted in 17 years” the report says.

The organization has filed a complaint against CIL with SEBI for concealing material evidence on the scale of their coal reserves in contravention with listing agreement under the Indian Securities Contracts Regulations Act, 1956.

Commenting on the findings, Ashish Fernandes of Greenpeace said: “Coal India is trying to deceive its present and future shareholders by hiding the fact that its extractable reserves are almost a fifth less than it claims. Coal India has a legal duty to tell the truth and they are failing to do that.”

Supreme Court Advocate Shaunak Kashyap said, “It is a matter of grave concern that a government controlled company has failed to notify the exchanges of this reduction in their reserves, something that has serious implications for both investors and the country at large.”

Despite unions threatening to strike if the sale goes ahead and with the company share price dropping in recent weeks, the company is pushing its new share offer on the international market with its tie up with Bank of America, Deutsche Bank, Goldman Sachs and Credit Suisse.

“The new data about Coal India’s reserves also casts doubt on the government’s ability to sustain its planned investment in coal-fired power plants. Coal India currently supplies 80% of the country’s coal and India has plans to add over 100,000 MW of new coal by 2017, even though the company is struggling to supply existing power plants. As a result, spiraling coal imports have played a role in India’s ballooning Current Account Deficit and led to higher power tariffs” the report says.

Comments

 

Other News

BMC commissioner Chahal conferred with hon. doctorate

BMC commissioner and administrator Iqbal Singh Chahal has been conferred with a Honorary Doctor of Science Degree (honoris causa) by Guru Nanak Dev University in Amritsar, Punjab. Chahal was conferred the degree during the 48th convocation of the University in Amritsar at the hands of Punjab

Sebi to have two-track approach on ESG

Securities and Exchange Board of India (Sebi) aims to use a two-track approach on environmental social and corporate governance (ESG). Addressing a conference on ‘ESG for Atmanirbhar Bharat` in Mumbai, Sebi chairperson Madhabi Puri Buch said that that there should not be a single carbo

Accuracy more important than speed in news: Anurag Thakur

Presenting authentic information is the prime responsibility of media and that facts should be properly checked before they are put in the public domain, union minister of information and broadcasting Anurag Thakur has said. “While speed with which the information is transmitted is imp

FM concludes pre-budget consultations

Union minister for finance and corporate affairs Nirmala Sitharaman has concluded the pre-budget consultation meetings for Budget 2023-24 that were held from November 21 to 28 in the virtual mode. More than 110 invitees representing seven stakeholder groups participated in eight meetings sch

Coal production rises by 18% to 448 MT

The total coal production in the country stands at 448 million tonnes (MT) for the month of October 2022 which is 18% higher than the production of the corresponding period of last year. The growth of coal production from Coal India Ltd (CIL) is also more than 17%. The ministry of coal said

How to execute large-scale social impact projects

The number of social innovators and entrepreneurs has considerably increased recently in India. The idea of social entrepreneurship, which aspires to provide novel solutions for the world`s most critical social issues, is now receiving more attention. Challenges like overworked healthcare,

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter