Naveen Jindal and Kumar Mangalam Birla are among those hit hard by the Supreme Court decision to deallocate coal blocks.
The apex court has decided to cancel all coal block allocations with the exception of those given to Government companies where there are no joint ventures and ultra mega power projects. It has also levied a penalty of ₹295 per tonne on coal which has been extracted till now.
The producers can continue mining for another six months, but the penalty will be levied on each tonne of coal being mined.
Naveen Jindal-promoted Jindal Steel and Power Ltd’s (JSPL) shares ended 9.99 per cent lower on the BSE at ₹189.70. Coal blocks operated by the company produced nearly 12 million tonnes of coal in 2013-14.
Rakesh Arora, Research Head (India) at Macquarie Capital Securities, said JSPL will be the worst hit as it will have to pay over ₹3,000 crore in penalties and also participate in the bidding again if the blocks are auctioned. The company, however, did not comment on the Supreme Court verdict. On Tuesday, Jindal said the company has invested around ₹50,000 crore based on the coal blocks allocated to it.
Aditya Birla Group’s Hindalco will also be affected with its Talabira-I block in Odisha, which is currently operating, being de-allocated. The company will also loose the Mahan coal block which it got through a joint venture with Essar group.
Meanwhile, the Association of Power Producers welcomed the six-month breather given to operational mines.
“This six-month period provides for a transition plan/remedial road map to effect seamless transfer of mines from present owners and to ensure that the coal supply disruption is kept to the minimum,” said Ashok Khurana, Director General of the association of Power Producers.