Companies & Sectors
Coal India’s seven new blocks on offer

With the seven new blocks, Coal India hopes to develop 15 open cast and 12 underground mines, with an annual production capacity, when in full operation, of around 40-50 million tonnes

Narasing Rao, chairman and managing director (CMD) of Coal India, while attending a seminar organized by the Mining, Geological and Metallurgical Institute of India, in Kolkata, last week, met the press and told them that plans are afoot to invite bids to appoint miners for seven new coal blocks.


The RFQ (request for qualification) is likely to be floated next week to short list miners to facilitate development of five open cast and two underground mines.

Eventually, Coal India hopes to develop 15 open cast and 12 underground mines, whose total production capacity, when in full operation, is estimated to be in the 40-50 million tonnes annually. Time frame has not been stated as a lot of work will still have to be completed.


It is gratifying to note that the entire process will be completed and contracts awarded, for these seven blocks, by March 2014. These seven blocks are estimated to achieve an annual production of 17-18 million tonnes. The actual development and production wholly depends upon the successful bidder and the speed at which he is able to obtain all necessary "clearances" to commence work at site.


It is expected that some foreign miners will also make bids this time, as this will enable them to offer advanced and technically superior mining equipments, some of which may not have been introduced to this market at all. Presumably, such equipments are already in use, successfully, at other mining areas in Australia and Europe/US. Some bids may be expected from UK and Poland also.


Since this will be a public-private partnership, some of overseas miners may be making the entry bids through their Indian associates, who may be fully conversant with the local conditions. At the end of the day, even though some advanced, state of the art equipments may be offered for use, in these new blocks, the fact remains that manpower requirements will have to be sourced locally.


What is of prime concern and importance is to go through the RFQ in an above-board and fair manner, award the contracts and lay down strict performance deadlines. Environmental issues are most likely stumbling blocks but in order to expedite the development, and reduce the dependence upon imported coal if the authorities were to tweak the rules, in a transparent manner, it may ease the situation.


Other factors, such as the nearest coal block in operation, details of existing railroads for logistical purposes, whether or not government owns the entire land covering the coal blocks, or part of which are privately owned, and the grades of coal that have been found on test drilling carried out, are important in expeditiously finalising the deals.


If Coal India can give further details on these blocks, it would be appreciated.

In the meantime, it would be of interest to know as if Coal India has any plans to rescue 3.5 million tonnes of coal lying in various ports, awaiting clearances, but the importers are reluctant to do so due to high rupee element cost, caused by the fall in value?

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


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GMR divests majority stake in GUEL project to India Infrastructure Fund

The infrastructure major has divested 74% of its 73km long road project in Tamil Nadu—GMR Ulundurpet Expressways Private Limited (GUEL)—to IDFC-owned India Infrastructure Fund

In line with GMR Group’s ‘Asset Right and Asset Light Strategy’, GMR Highways Ltd has signed a definitive agreement with India Infrastructure Fund (IIF) to divest 74% stake in GMR Ulundurpet Expressways Private Limited (GUEL). The transaction is subject to closing conditions customary to such transactions. IIF emerged as successful bidder in buying majority stake in GUEL, which attracted strong interest from several major investors from India and abroad. This is a second major divestment in GMR’s roads portfolio in less than six months. GUEL operates the highway stretch of about 73km, from Tindivanam to Ulundurpet, on National Highway 45 in the state of Tamil Nadu. The project commenced commercial operations in July 2009. GMR Group will receive a consideration of about Rs222 crore for the sale of 74% equity stake.

IIF, which is one of the largest infrastructure focused funds, has a well-diversified portfolio with existing investments in roads, ports, conventional and cleantech energy assets. IIF has investments in several infrastructure entities that operate in the aggregate over 1,878km of roads in India and this investment will further expand its existing roads portfolio.

Madhu Terdal, Group chief financial officer of GMR Group said, “This transaction signifies GMR Group’s ability to successfully implement its ‘Asset-Light-Asset-Right’ strategy under challenging market conditions. We at GMR Group, continue to focus on creating liquidity and reducing our leveraged position, as part of the strategy of churning of assets. Divestment of this asset will also reduce the debt as on 31 August 2013, by about Rs459 crore on a fully consolidated basis, in addition to infusing equity funds of Rs222 crore. The GMR Group will continue to focus in adopting this approach in other businesses as well. This partnership will also strengthen the relationship with IDFC.”

MK Sinha, managing partner and chief executive officer of IDFC Alternatives said, “This investment is our first major acquisition and a step in the direction of implementing our road sector strategy of acquiring control of operational projects with proven traffic history. Given the uncertainty and delays in implementing under construction projects, we will continue our focus on acquisition of operating road assets. This investment also reinforces our desire to stick to partners with whom IDFC has proven and long standing relationships like the GMR Group and we look forward to continue working with GMR in building and operating quality infrastructure assets in India”.


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