Coal India slips on buzz UK shareholder to file petition in Indian court

Coal India fell 2.13% at Rs 335.80 at 10:41 IST on BSE on reports The Children's Investment Fund has appointed a law firm to fight its case against the state-run firm and its directors for alleged breach of corporate governance practices. Meanwhile, the BSE Sensex was down 6.49 points, or 0.04%, to 17,397.71. On BSE, 57,000 shares were traded in the counter as against an average daily volume of 6.91 lakh shares in the past one quarter. The stock hit a high of Rs 341.40 and a low of Rs 334.75 so far during the day. The stock had hit a record high of Rs 422.30 on 31 May 2011. The stock had hit a 52-week low of Rs 293.75 on 22 December 2011. The stock had outperformed the market over the past one month until 30 March 2012, gaining 2.99% compared with the Sensex's 1.96% fall. The scrip had also outperformed the market in past one quarter, rising 14.04% as against 12.61% rise in the Sensex. The large-cap state-run company has an equity capital of Rs 6316.36 crore. Face value per share is Rs 10. According to reports, the UK-based hedge fund, The Children's Investment Fund (TCI), has appointed law firm, Luthra & Luthra, to fight its case against Coal India and its directors. TCI reportedly said government's decision to ask Coal India to sign long-term fuel supply agreements (FSAs) with private power producers is prejudicial to the public interest and oppressive to shareholders. Reports suggested that the move came a day after the government reportedly took a tough stand that it may invoke a Presidential directive to force the Coal India board to sign FSAs with power companies. TCI said it believes that a number of government directives are not in the public benefit and should not be followed by CIL, because they destroy the profitability in CIL. Prime Minister Manmohan Singh on 15 February 2012 directed Coal India to sign FSAs with power plants that have entered into long-term Power Purchase Agreements (PPAs) with power distribution companies and have been commissioned/would get commissioned on or before 31 March 2015. Singh has directed Coal India to guarantee supplies to the private power sector in a bid to alleviate the nation's chronic energy shortages. For power plants that have been commissioned up to 31 December 2011, Coal India will sign FSAs before 31 March 2012. The FSAs will be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years with trigger level of 80% for levy of disincentive and 90% for levy of incentive. In case of any shortfall in fulfilling its commitment under the FSAs from its own production, Coal India will arrange for supply of coal through imports or through arrangement with State/Central PSUs who have been allotted coal blocks. A statement from the PMO had said that these arrangements would provide relief to power plants with estimated capacity of more than 50,000 megawatts (MW). The proposed set of arrangements is being seen as a major step forward in solving the problems of power sector in the country and is likely to boost investors' confidence in India's power sector, the statement added. It will help not only in achieving power generation capacity targeted in the 12th Plan but also assist in achieving the targeted growth of GDP, according to the statement. On a consolidated basis, Coal India's net profit rose 53.8% to Rs 4037.76 crore on 21% growth in net sales to Rs 15349.28 crore in Q3 December 2011 over Q3 December 2010. Coal India is the single largest coal producer in the world. Operating through 81 mining areas, the company is an apex body with 7 wholly-owned coal producing subsidiaries and one mine planning and consultancy company. The company also fully owns a mining company in Mozambique christened as 'Coal India Africana Limitada'. The Government of India owns 90% stake in Coal India (as at end December 2011).