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

Seeking religious aid in governance in India

India is known for its old and rich culture, and religion forms a substantial part of it. In India it is hard to find people who categorise themselves as atheists, unless we refer to the matrimonial or dating apps that now have a breed distancing themselves from any religion and categorise themselves as sp

Uneasy calm in riot-torn Delhi

No untoward incidents have been reported from the parts of the capital that witnessed communal riots this week, but the peace Thursday morning was still tentative and a number of those hospitalized for injuries were battling for life. Clashes began Sunday evening and engulfed parts of northe

Modi-Trump show gives India-US ties new dynamism

In the more than 40 hours of stay in India during his two-day visit, US president Donald Trump exhibited his talents as a politician and also a showman with acumen to provide the Indian audience and Americans back home enough opportunity to stay glued to his activities on the Indian soil. Whether it be his

People-to-people relations the real foundation of Indo-US friendship: Modi

On the second and last day of US president Donald Trump’s India visit, prime minister Narendra Modi said the real foundation of Indo-US friendship is people-to-people relations. Trump, meanwhile, sidestepped the contentious issues of the protests against the new citizenship law, telling a joint press

America loves India, America respects India: Trump

America loves India, America respects India, said US president Donald Trump as he and first lady Melania Trump began their short visit of India from Ahmedabad on Monday, welcomed by prime minister Narendra Modi. The US president was in Ahmedabad, in Modi`s home state of Gujarat, to attend th

2020 is crucial for CPSE: Arjun Ram Meghwal

"The year 2020 is going to be a significant year for India and especially for Central Public Sector Enterprises (CPSE), "said the Arjun Ram Meghwal, Minister of State for heavy industries and public enterprises on Wednesday at the 7th PSU Awards and Conference organised by Governance Now on 19th



Archives

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter