UK-based The Children’s Investment (TCI) Fund, the largest shareholder in Coal India,has softened its stand against the country's biggest coal producer indicating that it has got a positive feedback from the government about the suggestions to reform the functioning of the state-owned entity.
The hedge fund has filed two separate cases in the Delhi and Calcutta high courts levelling serious allegations of coal ministry's interference in the functioning of CIL and the failure of company's directors to perform their duties with adequate care and skill leading to substantial financial losses.
“We met coal minster this afternoon. there was great willingness and understanding to resolve the issue. Our meeting with the finance minister last week has also been positive,” said Oscar Veldhuijzen of TCI.
He said the hedge fund moved the courts only after direct interference by the coal ministry in pricing became very evident but refused to speak further as matter is sub judice. At a hearing in the Delhi high court on Friday, the court gave four-weeks time to TCI to respond to the Centre’s reply that it did not interfere on the issue of coal pricing.
TCI had moved the court earlier alleging that coal ministry was not allowing independent functioning of CIL and interfered regularly on pricing much against the interest of the hedge fund management.
The UK-based entity had earlier also moved the Calcutta high court in October this year against the directors of CIL, alleging they failed to perform their duties with adequate care and skill leading to substantial financial loss for the PSU major.
The petition is likely to come up for hearing on December 12.
In a press statement ,the company claimed CIL would have lost about R8,700 crore in pre-tax profits by reversing the price increase of December 31, 2011.
Further, by failing to raise FSA coal prices to market levels, the directors have cost CIL a staggering R215,250 crore in pre-tax profits since the IPO, it alleged.
It had alleged that losses were caused by decisions to reverse a price increase made in 2011, failing to raise coal prices to market levels and failing to take steps to increase and streamline production, causing loss of revenue and leading to coal blocks being allocated to third parties.
"90% of such profits could have flowed to the Indian people in dividends, and such sums could easily have funded free electricity for all Indian households," TCI