The stock of Jindal Steel & Power (JSPL), which plunged almost 14 per cent to a low of ₹128 to start with, has lost 9 per cent,after the Central Bureau of Investigation filed an FIR against the company in the coal block allocation scam.
The FIR has been filed relating to the company’s Gare Palma IV/1 coal block in Chhattisgarh on allegations of mining beyond the approved area and mining excess coal.
The block, which has an approved extraction capacity of 6 million tonnes per annum (mtpa), feeds JSPL’s sponge iron and captive power plants at its 2.4 mtpa steel facility at Raigarh in Chhattisgarh.
This is one of the blocks that were recently de-allocated by the Supreme Court after it found irregularities in coal block allocation made by the government after 1993. In fact, JSPL, whose Gare Palma IV/1, IV/2 and IV/3 blocks were de-allocated, was among the worst affected companies as it was using the coal mined from these blocks to feed its existing operations.
Shah panel findings
But, this is not the first time that JSPL has found itself caught in a legal tangle. The Shah Commission which enquired into illegal iron ore mining in Odisha, had found irregularities in the operation of the Thakurani mines in Odisha by the lessee Sarada Mines.
The benefit of these violations was alleged to have gone to JSPL, which was procuring iron ore from these mines. Sarada Mines was alleged to have been selling the entire output to JSPL at rates much below market price.
Apart from that, JSPL, in violation of rules, had also set up two crusher units inside the mine leasehold area. The case was then referred by the Supreme Court to a Central Empowered Committee (CEC) in September 2013. The CEC, which came out with its report last week too has raised questions, about the arrangement between Sarada Mines and JSPL.