We dug deep into the coal behemoth’s seamier side. Though Coal India is flying high now on the back of its big-bang IPO, it really did not come up smelling of roses
Now that the hype about Coal India Ltd's (CIL) Rs15,000-crore mega initial public offer (IPO) is dying down, now it's time to look at the company's darker side.
For instance, there are about 615 proceedings pending against employees of CIL and its subsidiaries, including investigation by the CBI and the Central Vigilance Commission, (among other regulatory bodies) relating to corruption and other charges. Still, CIL firmly believes that these proceedings will not impact its financial results. The world's largest coal reserve holder, in its red herring prospectus, has not submitted a comprehensive list of legal proceedings.
In May 2010, MP Dikshit, ex-chairman and managing director of South Eastern Coalfields Limited (SECL), a subsidiary of CIL, was arrested by the CBI for allegedly accepting about Rs1.30 crore from two private firms. In 2003, the government suspended NK Sharma, CMD of CIL, on allegations of corruption. He was charged with misappropriation in the purchase of coal and allegedly favoured Bharat Earth Movers Ltd for awarding a contract.
The Centre is also fully aware about CIL and its subsidiaries' illegal practices but it looks like the government, and indeed, the coal behemoth itself, do not seem to be concerned, since the entity accounts for more than 80% of India's coal output.
Recently, Union coal minister Sriprakash Jaiswal had told reporters that the Centre has taken "adequate efforts" to curb corrupt activities in the coal sector, which had built up over the past 30 years. However, he did not miss the chance to blame state governments, saying that the Centre is "not getting help" from them in eradicating corruption.
As on 10 September 2010, nine public interest litigations, three criminal and ten income-tax cases have been filed against the company. Despite being a government undertaking, CIL is also facing allegations from other government departments. The Department of Central Excise and Customs has raised a claim of Rs6.40 million against the company (CIL did not provide the detailed information in its red herring prospectus).
There are 16 arbitration matters and 10 civil cases, which account for about Rs268.69 million and more than Rs100 million respectively, involving the company.
Additionally, there are about 160 cases relating to sales and marketing disputes filed by CIL's consumers. The company has also been charged for alleged encroachment of land for carrying on mining activities and 236 service matters have been filed by its employees.
CIL's subsidiaries are one step ahead as far as pending litigation goes. More than 250 criminal cases have been filed against Bharat Coking Coal Limited (BCCL), another subsidiary of CIL. One notable case has been the criminal case filed by the directorate general of mines safety, against BCCL officials, alleging that certain company officials had failed to take timely action to repair or replace badly-deteriorated pipelines which resulted in the death of three workers.
Six public interest litigations and a whopping 448 tax cases, relating to sales tax, service tax, royalties, rural employment and primary education cess, and bank guarantees which involve Rs5,696.27 million, have been filed against BCCL. A total of 868 civil, 843 service cases and 71 arbitration petitions have also been filed against BCCL.
Central Coalfields Limited, which has lost 11.26 lakh tonnes in production till June this year, is also facing allegations for illegally dumping hazardous waste, forceful occupation of land, violating environmental norms, evading electricity duty and various tax cases. The total amounts involved in tax cases and arbitration cases are Rs29,423.42 million and Rs478 million respectively. The directorate general of mines safety has also slapped accident cases against a few CCL employees.
Central Mine Planning and Design Institute Limited (CMPDIL), Eastern Coal Fields Limited (ECFL), Mahanadi Coalfields Limited (MCL), Northern Coalfields Limited (NCL), South Eastern Coalfields Limited (SECL) and Western Coalfields Limited (WCL) - all CIL subsidiaries - are facing thousands of cases relating to criminal, tax, encroachment and environmental issues amounting to billions of rupees. A molestation case has also been filed against a senior official of NCL.
A media report says that despite the company's safety and health measures, the situation is still poor. Major accidents were in the New Kenda Colliery (54 deaths) in 1994, Gaslitand mine (65 deaths) in 1995, and Bagdiggi mine (29 deaths) in 2001 and there is also a steady toll of smaller accidents. In the case of units under CIL, the annual number of deaths run at an average of 190, added the report.
Despite the company and its subsidiaries being charged with serious allegations, almost all market pundits and research firms have gone ballistic over the IPO citing the company's strong balance sheet, rapidly growing production and reserve capacity and increasing demand for the company's products.
Mumbai: Tata Consultancy Services (TCS), the country's largest software services exporter, climbed to a new high in early trade today after the company's profit growth outpaced that of Infosys Technologies Ltd and Wipro Ltd. The stock price gained 5.8% to Rs1,043, the highest since the shares started trading in August 2004 after the company posted a more than 30% jump in quarterly net profit and said it expected strong demand for outsourcing towards the end of the year.
Wipro, the third-largest outsourcer, lost nearly 4% to Rs455 after it announced a 10% growth in Q2 profit, which was below market expectations. The stock price of Infosys - the second-largest exporter - gained up 1.6% to Rs3,084.
TCS yesterday announced a 32.1% jump in net profit at Rs2,169 crore in the quarter to September 2010 and a 24.9% growth in revenues year-on-year at Rs9,286 crore, reports PTI. "It has been a quarter of superior performance across the board, driven by volume growth of over 11%," N Chandrasekaran, managing director and CEO of TCS, said. "In uncertain economic conditions, our results are a milestone on the path to a strong demand recovery."
Mr Chandrasekaran said that the growth achieved in the past quarter makes the company positive about its outlook for global demand. He refuted pricing concerns, saying that the company expects pricing to rise towards the end of the year. Last week, Infosys also raised its guidance, suggesting an increase in corporate spending on information technology.
TCS added 30 new clients and won eight large deals, including five large deals from the US, in the second quarter. The company also saw significant deal closures across sectors and the deal pipeline is expected to be good, he said.
All major markets grew in double-digit terms with Europe leading the pack. The company's North American revenues crossed $1 billion. All emerging markets also grew with India and APAC leading the pack. All grew registered double-digit growth, Mr Chandrasekaran said. "Given the growth we have achieved across all industry units, we are very positive about the global demand recovery going forward while being watchful in view of the macro environment."
The Tata group company sees discretionary spending by clients and expects an increase in clients' budgets next year. It also expects increase in IT spends by customers in FY12.
Mr Chandrasekaran pointed out to the appreciation of the rupee as a "big headwind" in the next quarter. The company reported a Rs47 crore foreign exchange loss in Q2. "With our major operating currencies continuing to be volatile, we remain vigilant on this front," S Mahalingam, chief financial officer of TCS, said.
During the quarter under review, TCS was granted two patents. Till date, the company has applied for 380 patents and has been granted 64 patents.
Hyderabad: The Andhra Pradesh Police today said it has arrested three people working with SKS Microfinance and Spandana on a complaint of harassment by a borrower and might book the companies' respective promoters Vikram Akula and Padmaja Reddy under a new ordinance to check coercive methods of loan recovery, reports PTI.
The borrower, Ammulu, filed the complaint with the Yemmiganur police station in Kurnool district, about 270 km from here, last night. A case was registered under Section 16 of the AP Microfinance Institutions (Regulation of Money Lending) Ordinance-2010 and three persons belonging to SKS and Spandana were arrested.
"After investigation we came to know that the recovery officials were acting under the instructions of their company management. So under the new ordinance Vikram Akula and Padmaja Reddy may also come into the case," CH Srikanth, Superintendent of Police (Kurnool) told PTI today.
This is the first case booked in the state under the new ordinance issued a week ago.
Section 16 of the ordinance says all persons connected with and responsible for the day-to-day control, business and management of a microfinance institution, including the partners, directors and the employees, who resort to any type of coercive measures against the self-help groups or its members, or their family members, shall be liable for punishment of imprisonment, which may extend up to a period of three years or with fine which may extend to one lakh rupees or with both.
According to Kurnool police, Ammulu borrowed a total of Rs70,000 from SKS and Spandana and later defaulted on payments.
"She has been avoiding the collections officials of the companies for the past two months. According to the complaint lodged with us she is being harassed by the company officials for the repayment. We inquired in to the matter and registered cases," Guna Sekhar, inspector of police, Yemmiganur, said.
He said a case has been also booked under Sections 341 (Punishment for wrongful restraint) of IPC and sections related to word, gesture or act intended to insult the modesty of a woman and punishment for criminal intimidation.
Arvind Rao, AP director general of police, said the department has been instructed to be strict on cases related to microfinance.
"We held video conference with the participation of all district SPs and commissioners of police and issued guidelines to book cases under the new ordinance," the DGP said.
The ordinance was aimed at regulating MFIs by making registration with the state compulsory and also disclosure of interest rate charged. The move came following reports of harassment of borrowers and also incidents of suicides although the companies denied that the suicides were unrelated to the loans.