The Calcutta High Court on Tuesday directed Coal India (CIL) to file a counter-affidavit to reply to the charges of The Children’s Investment Fund Management (TCI), which filed a lawsuit against the miner for under-pricing coal. The court of justice IP Mukherjee will hear the dispute on December 12, but in the meantime CIL will have to comply with the directive of the court.
TCI, which has a 1.5% stake in CIL, filed the suit on October 12, alleging that due to under-pricing of coal, CIL will lose R8,700 crore pre-tax profit in 2013 fiscal. A TCI statement said the hedge fund had calculated that CIL had given away the opportunity to earn a staggering R215,250 crore in pre-tax profits since it got listed in 2010.
Although CIL’s profit was up 36% in FY12 to R14,788 crore and sales up 24% to R62,415 crore, TCI argued that the government, as the majority shareholder, had made undue interventions and it had not allowed CIL to price coal at par with international prices.
Although CIL chairman S Narsing Rao did not want to comment on the issue, he had earlier told FE the CIL management was not functioning with the stock price movement in mind and that it had the liability to supply coal to the Indian power sector at a price so that power is produced at cheaper rates.
CIL is concerned about the compensation issue. “This is a very grey area and we will come to know about it after the court directive is in our hand,” a CIL official said.