Among the companies involved in the coal block allocation scam, there are several listed companies whose share prices were driven by euphoric foreign investors, have now crashed. Here is a summary report
The indiscriminate allocation of coal blocks in the wake of adverse report by Comptroller and Auditor General of India (CAG) has stalled the Parliament’s Monsoon Session. The opposition has called for cancellation of the allocated coal blocks summarily and has demanded the prime minister’s resignation. Four blocks have been de-allocated today by an Inter-Ministerial Group (IMG). The opposition has sought the resignation of Naveen Jindal who has been allocated several blocks, and action against others who have been named by the Central Bureau of Investigation (CBI) for alleged irregularities. All attention has been fixed on big names like Jindal Steel, which cornered a large chunk of coal and iron ore mines over the past few years with the active connivance of chief ministers of several resource-rich states. Several of the coal allottees are listed companies. Their stocks had run up hugely in 2006 and 2007 in anticipation of the big money that the companies would make. These stocks were actively chased by foreign institutional investors (FIIs). Where are these now? Here are their stocks charts which tell the story of resource boom and bust, for which FIIs were more responsible than retail investors.
Adhunik Metaliks Ltd
Adhunik Metaliks (AML), is an alloy, special and construction steel manufacturing company, having an integrated steel plant of 0.45 million tonnes at Sundergarh, Orissa, It has been allotted a captive iron ore mine at Keonjhar and captive coal mines at Talcher and Angul in Orissa. The company had been allocated coal blocks in 2006 and 2009 respectively. FII investment, which was around 6% of the total shares in 2006, doubled to 12% by 2008. Since March 2011 FIIs begun exiting the stock and their holding has come down from 13% to 6% as on June 2012. The stock shot up by more than seven times from a low of Rs30 per share in Aug 2006 to Rs230.55 in December 2007. The stock is currently trading around Rs28 per share, down 88% from its peak.
Electrosteel Castings Ltd
The company which has a manufacturing facility at Khardah (Orissa), Elavur (Tamil Nadu) and Haldia (West Bengal) is into production of ductile iron pipes, DI fittings and pig iron. It was allocated an individual coal block in 2005 at Jharia, Jharkhand, with a reserve of 231.22 MT (metric tonnes). In 2006, it was allocated a joint coal block with three other companies in North Karanpura, Jharkhand, with a total reserve of 923.94 MT. The stock which was trading at around Rs40 a share in 2006 and 2007 doubled and is now down by 80% from its peak more to Rs18. FII investments which had gone up to a high of nearly 13% of the total share capital in 2007 has come down to 4%. DII investment, which had peaked in Jun-07 to 22.55%, is now down by more than half to 9.66%.
Jai Balaji Industries Ltd
Jai Balaji Industries, which has five manufacturing facilities located in Durgapur and Raniganj in West Bengal, Durg in Chhattisgarh and a sixth unit that is being set up in Purulia, West Bengal, manufactures direct reduced iron, intermediary and finished steel. The company was allocated a coal block in 2008 for the extraction of sponge iron in Rohne, Jharkhand which is to be shared with Bhushan Power & Steel, JSW Steel. In 2009, they were allocated another joint coal block in Raniganj, West Bengal, with a total capacity of 229.5 MT. The stock which was trading in the range of Rs200 to Rs300 per share in 2009 and 2010 is now trading at Rs33 per share down by nearly 90%. From having negligible FII holding up to September 2009, the holding increased to 12% in the following quarter. However, from December 2011 the FII holding has dropped to 5% end of June 2012.
Jayaswal Neco Industries Ltd
Jayaswal Neco Industries, an integrated steel plant, manufactures steel for the automobiles, white goods, engineering and also makes ferrous and non-ferrous castings. Abhijeet Industries which is an offshoot of this group, which got coal blocks allotted to it, is being investigated by the CBI for misrepresentation in its bid to secure Chhattisgarh iron ore blocks. A case has been filed against the company for cheating and criminal conspiracy more than a month ago. In 2005, the group was allocated a coal block in Moitra, Jharkhand, with a reserve of 215.78 MT, and then another in 2006 in Mand Raigarh, Chhattisgarh, with a reserve of 107.2 MT. The stock of the company which peaked to around Rs55 per share in May 2008 is now trading at Rs10 per share, down 80%. DII holding which was as much as 30% in June 2007 is now down to 4.76%
Jindal Stainless Ltd
A part of the OP Jindal group, Jindal Stainless (formerly JSL Stainless) with manufacturing facilities at Hisar and Odisha is one of India's largest and the only fully-integrated stainless steel manufacturer. Its product range includes ferro alloys, stainless steel slabs & blooms, hot rolled coils, plates, cold rolled coils and specialty products such as razor blade steel, precision strips and coin blanks. In 2005, Jindal Stainless was allocated a joint coal block with total 333.4 MT reserve along with JSW steel and a couple of other companies at Talcher, Orissa, for the use of power generation. The stock price doubled from near about Rs100 in 2005 to Rs235 in December 2007, the price of the stock is now around Rs73. The company has pledged nearly 98% of its Indian promoter capital as on September 2010. FII holding, which was as high as 21%, came down to 6% in December 2006. Surprisingly FIIs have gained interest in the stock again taking their holding up to 23%
Usha Martin Ltd
Usha Martin, the flagship company of the Usha Martin Group, is one of India’s largest and the world’s second-largest steel wire rope manufacturer. The company is into the manufacture of wire rods, bright bars, steel wires, speciality wires, wire ropes, strand, conveyor cord, wire drawing and cable machinery. The company has overseas manufacturing operations in Thailand, UK and Dubai. In 2003, the company was allocated the Kathautia coal block in Jharkhand for end use for sponge iron with a reserve capacity of 29.76 MT. Later in 2005, it was allocated the Lohari block in Jharkhand with a 10MT reserve capacity. The stock shot up from around Rs16 in the start of 2005 to Rs135 in December 2007, a rise of 800%. The stock is now trading at Rs22 per share near the same price it was trading seven years back, down 85% from its peak. FII holding, which had been around 20% from March 2006 to March 2011, is now down to 13.58%.
With black flags fluttering in the backdrop, the protesters said they were prepared to sacrifice their lives to protect their livelihood and ecology through the 'jal satyagraha'
While lifting the stay on appointment of information commissioners under the RTI Act, the Supreme Court said the government should give preference to people from judicial background while appointing such Commissioners
Holding that Information Commissioners (ICs) at the central and state level perform quasi-judicial functions, the Supreme Court on Thursday asked the government/s to appoint people preferably from judicial background as members.
A bench of justices AK Patnaik and Swatanter Kumar also lifted the stay on appointment of information commissioners.
The Supreme Court also asked information commissioners to work in benches of two members each, with one of them being a “judicial member” while the other an “expert member”. “The judicial member should be a person possessing a degree in law, having a judicially trained mind and experience in performing judicial functions. A law officer or a lawyer may also be eligible provided he is a person who has practiced law at least for a period of twenty years as on the date of the advertisement. Such lawyer should also have experience in social work. We are of the considered view that the competent authority should prefer a person who is or has been a judge of the high court for appointment as information commissioners. Chief Information Commissioner at the Centre or state level shall only be a person who is or has been a chief justice of the high court or a judge of the Supreme Court of India,” the judgement said.
“The appointment of the judicial members to any of these posts shall be made “in consultation” with the Chief Justice of India and chief justices of the high courts of the respective states, as the case may be,” the apex court said.
The bench passed the order on a public interest litigation (PIL) challenging Section 12 and 15 of the Right to Information (RTI) Act, 2005, enumerating the qualifications needed for the appointment of members to the commissions.
The bench, however, refused to quash the Sections but asked the government to modify it so that people from the judicial background are also preferred for the post.
“..without any peradventure and veritably, we state that appointments of legally qualified, judicially trained and experienced persons would certainly manifest in more effective serving of the ends of justice as well as ensuring better administration of justice by the Commission. It would render the adjudicatory process which involves critical legal questions and nuances of law, more adherent to justice and shall enhance the public confidence in the working of the Commission,” the apex court said in its judgement.
Currently, none of the eight members of the Central Information Commission (CIC), including the Chief Information Commissioner are from judicial background.
The CIC comprises one Chief Information Commissioner and 10 Information Commissioners.
Presently, three posts of Information Commissioners are vacant in the CIC.
The petition filed by one Namit Sharma had contended that since the work of the CIC under the RTI Act is mainly connected with the law, members in the transparency panel should have judicial background.
However, government had opposed the petition contending that it could not be made mandatory that the members should have judicial background.