The Supreme Court’s judgment to cancel all the captive coal blocks allocated since 1993 will be a body blow for all the corporates who are impacted by the order, say top India Inc leaders.
“This is worst possible news for the Indian companies. This will take back country by many decades in terms of development,” said a CFO of a large company asking not to be quoted.
The order covers blocks allocated to private and state government entities. The SC had earlier questioned the process and legality of the allotment and on Wednesday cancelled 214 coal blocks allotted to Indian companies – barring Sasan coal block allotted to Reliance Power. The order is a big negative for Essar, Aditya Birla group’s Hindalco, Tata Steel, Vedanta group, Jindal Power and Steel, Jaypee and Adani among other top corporates. Hindalco has lost its Talabira coal mine apart from Mahan coal mine which was in JV with the Essar group. Essar group had already started production from its power project in Mahan but could not mine coal due to an agitation by the locals.
“This is worst possible news for the Indian companies. This will take back country by many decades in terms of development,” said a CFO of a large company asking not to be quoted.
The order covers blocks allocated to private and state government entities. The SC had earlier questioned the process and legality of the allotment and on Wednesday cancelled 214 coal blocks allotted to Indian companies – barring Sasan coal block allotted to Reliance Power. The order is a big negative for Essar, Aditya Birla group’s Hindalco, Tata Steel, Vedanta group, Jindal Power and Steel, Jaypee and Adani among other top corporates. Hindalco has lost its Talabira coal mine apart from Mahan coal mine which was in JV with the Essar group. Essar group had already started production from its power project in Mahan but could not mine coal due to an agitation by the locals.
The companies impacted the most will be the ones where a significant
portion of value is derived from these coal assets. Ongoing investments
in end use plants linked to these blocks will also suffer, impacting
the broader economy, say experts.
“We have no other option but to work on a Plan B,” said a top Hindalco official. “We were gearing up for this bad news for quite some time,” said he.
Apart from cancellation of allotment, the corporates will also have to pay a hefty penalty on the production till date at the rate of Rs 245 per tonne. The power companies will get coal from Coal India as the SC has made it clear that Coal India will take over these plants after March 31st next year.
“We have no other option but to work on a Plan B,” said a top Hindalco official. “We were gearing up for this bad news for quite some time,” said he.
Apart from cancellation of allotment, the corporates will also have to pay a hefty penalty on the production till date at the rate of Rs 245 per tonne. The power companies will get coal from Coal India as the SC has made it clear that Coal India will take over these plants after March 31st next year.
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