Coal India’s Rs12,000-crore IPO likely in September

"We had planned to bring the CIL IPO by July or August. But it could come in September also. We will bring the issue when conditions are good," coal minister Sriprakash Jaiswal said

Indicating that the initial public offering (IPO) for Coal India Limited (CIL) could be postponed beyond August, the government today said that it will wait for good market conditions to launch it, reports PTI.

"We had planned to bring the CIL IPO by July or August. But it could come in September also. We will bring the issue when conditions are good," coal minister Sriprakash Jaiswal told reporters in New Delhi.

"Coal India will file its Draft Red Herring Prospectus (DRHP) by the month-end. We will definitely bring the CIL IPO," Jaiswal added.

Mr Jaiswal had earlier said that the government could mop up over Rs12,000 crore through the CIL issue.

The government is looking at divesting 10% of its equity through the IPO. At present, the Centre owns 100% equity in CIL.

The Union cabinet is yet to clear the proposal. Some left-wing trade unions have also been opposing the proposed sell-off.

On using imported coal prices as the benchmark for domestic coal, the minister said, "We have no such plans (as of now)."

However, Mr Jaiswal had said last week that "in the recent price revision exercise, efforts have been made to price higher grades of non-coking coal of Eastern Coalfield Ltd closer to import parity needs to be carried further."

The Planning Commission has also supported linking domestic coal prices to that of imported coal.

The government has been taking steps to bridge the coal demand-supply gap, which the minister pegged at 60 million tonnes for the current fiscal, by importing the fuel as well as mining it in joint ventures with foreign companies overseas and then shipping the produce to India.

"There are two options—one is importing coal to bridge the gap. The other is acquiring coal properties abroad in joint ventures for meeting our demand," he said.

"We are evaluating which of the two options would be more beneficial for Coal India. We will decide accordingly," he said.

CIL is in talks with US-based Massey Energy, Peabody Energy and Indonesia's Novem/Sinarma for mining coal jointly.

At present, the coal major is conducting due diligence on five properties of these firms in Australia, USA and Indonesia.

"We are also scouting in South African nations," he said.

On the Naxal menace affecting the country's coal production, he said, "Wherever the law-and-order situation is not good, coal mining work is hampered. But the government has no plans to halt mining in those areas."

Many coal-bearing states, including Jharkhand and Orissa, are Naxal-infested.

India produced 531 million tonnes of coal during the last fiscal, out of which CIL's output stood at 431.5 million tonnes.





Murky covers: Unscrupulous schemes to sell insurance products continue unabated

More and more dodgy schemes to sell insurance policies keep crawling out from the woodwork. But a number of insurance companies have preferred to maintain a deafening silence on these devious activities

Selling insurance translates into big money for agents. But a number of agents (and a few who are not authorised representatives of insurance companies) have been coming out with devious plans to sell policies to gullible investors. From operating multi-level marketing (MLM) schemes, blatant mis-selling of Unit-linked Insurance Plans (ULIPs), plastering of fake job applications all over the place and sending misleading text messages—every trick in the book is being tried to peddle insurance products.   
Moneylife has repeatedly highlighted these instances—but insurance companies have preferred to look the other way. Here are just a few of the cases that we have written on.

On 25 March 2010, agents from the Life Insurance Corporation of India (LIC) were trying new ways to trick people into buying insurance. A client was sold a policy under which she had to make a one-time premium payment of Rs1 lakh for 10 years—she was assured a monthly pension of Rs5,000 for the rest of her life. Debt-oriented instruments can offer returns of no more than 6%-7%, while equity-linked products can manage maximum returns of 15%. So what was the basis on which the client was offered these impossible returns on an insurance product? LIC has not replied to any of the detailed emails sent to them, till date.

Here’s another scheme that came to light on 6 April 2010, again involving LIC. Swarg, a corporate agent for the State-run insurer, was running an MLM scheme in LIC’s ‘Jeevan Saral Policy’. According to this ‘scheme’, after buying a Jeevan Saral Policy for a yearly premium of Rs6,005, one could earn an extra income of up to Rs4,46,976 within two years by getting in three more members into buying the policy. These members would have had to rope in three more members, and so the chain would go on.

This time, LIC responded by saying that “MLM is not allowed for selling life insurance. If anyone is doing it, action will be initiated. It is not permissible.” Yet, we have not heard of any action taken by the insurer so far.

On 16th April we wrote on how there is a company called Team Life Care Co running a website in which it lists down all the Bajaj Allianz products that it sells. However, Team Life Care Co was running a mirror website through a company called TLC Insurance Pvt Ltd where it was peddling a bizarre MLM scheme.

Moneylife contacted both Team Life Care Co and TLC Insurance (India) Pvt Ltd and members from both companies confirmed that these entities were part of the same organisation and shared a common managing director, one Mr Jagannath. When we contacted Bajaj Allianz, their response was: “We wish to inform you that Team Life Care Co (India) Ltd is a Corporate Agent of Bajaj Allianz Life Insurance and they solicit business through approved specified persons only.” So how was TLC Insurance running the MLM scheme?

On 19 April 2010, we reported on how Jeevanseva, a direct marketing firm, was selling personal accident schemes from Reliance General Insurance in an MLM format.

Again, there was no response from the insurer.

Another company is so brazen in its approach towards peddling MLM schemes involving LIC products, that it calls itself ‘Rose Valley Chain Marketing System’. It has an elaborate chain marketing scheme, as the name indicates, and has no qualms in handing out brochures that detail its MLM product.

On 18 May 2010, an official from Rose Valley told Moneylife, “Once you reach a certain level, you don’t have to work anymore; you can earn commission bought by your chain.” As usual, there was no response from LIC when we told them about Rose Valley’s MLM scheme.

On 27 May 2010, we reported on how local trains in Mumbai were being plastered with advertisements of an ‘incredible’ deal being offered for selling life insurance products of Birla Sun Life Insurance. As per the ad, anyone who goes in for this scheme would work only for two hours a day, sell five policies a month. For doing all this, the agent would get a commission of Rs6,000 per policy sold, amounting to Rs 3.6 lakh a year.

Birla Sun Life responded by saying that these schemes were not according to the company’s rules and regulations. “Our legal and compliance officer is already in action. We will be taking appropriate action against the person involved.” We have spoken to them over the past few days; we still await the results of their investigation.

On 11 May 2010, we had sent a mail to the Insurance Regulatory and Development Authority (IRDA) regarding these issues. A Giridhar, IRDA’s executive director told Moneylife: “Selling insurance through unlicensed persons is illegal. We will act on the information.”

When such schemes are expressly prohibited by the regulator, why do they continue to proliferate? That’s the question that both IRDA and the insurance companies need to answer.



Ramesh Karel

7 years ago

Good work!! A part of problem also is that though SEBI discloses, IRDA does not disclose the orders it has passes on its website. So if at all any action taken, is never known.

MF industry assets breach Rs8 lakh crore-mark in May

The industry's total assets under management grew by Rs34,393.67 crore, or 4.47%, in May

The assets under management (AUM) of the mutual fund industry grew by over 4% in May to cross the Rs8 lakh-crore mark and attain a six-month high, reports PTI.

The industry's AUM grew by Rs34,393.67 crore, or 4.47%, in May. The combined AUM of the 37 fund houses stood at Rs8,03,559.06 crore.

The last time the industry saw this record level of AUM was in November, when the assets hit an all-time high of Rs8.07 lakh crore, data by the Association of Mutual Funds in India (AMFI) showed.

Over May, Reliance MF, the largest fund house, saw an addition of Rs7,154 crore to its assets at Rs1.19 lakh crore.

After a gap of six months, the assets of HDFC MF breached the Rs1 lakh crore-mark in May. By the end of May, AUM of HDFC had increased by Rs7,160.53 crore to Rs1,01,863.31 crore, becoming the second fund house to manage assets of over Rs1 trillion.

Third-largest fund house ICICI Prudential MF saw its assets rising by Rs4,674.30 crore to Rs87,709.81 crore.

"The funds, which were pulled out in March, were re-infused in May. Also, short-term and ultra short-term funds saw hefty inflows, which propelled MF industry assets," Kotak Mutual Fund (fixed income and products) head Lakshmi Iyer said.

However, UTI MF bucked the trend and saw a decline of Rs840 crore from its assets to Rs78,617.15 crore during May.

During May, the Sensex dropped 3.5% as world equities wobbled on concerns over a debt crisis in the Eurozone. Analysts said that although inflow was not there in equity schemes, debt funds continued to witness investment interest.

Over the month, L&T MF added Rs1,045 crore to its assets, with May being the second consecutive month of rise. At the end of May, the AUM of L&T MF breached the Rs5,000-crore-mark to Rs5,170.69 crore.

During May, the assets of Kotak MF rose by Rs6,914 crore while Birla Sun Life MF saw its AUM increasing by Rs4,319 crore.

The other fund houses that saw their AUM rise in May included IDFC MF, Edelweiss MF, Franklin Templeton MF and Tata MF.

Of the 37 fund houses in the country, about 15 saw an erosion in AUM. This included LIC MF, whose assets fell by Rs1,544 crore to Rs 38,963 crore, and JP Morgan MF, which saw a decline of Rs330 crore to Rs3,785 crore.

Others that saw a decline in their assets included HSBC MF, Deutsche MF, Mirae Asset MF and SBI MF.


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