Coal India sticks to import plan

[Editor: Good news for the shareholders of MMTC (Face Value: Re.1, CMP: Rs.52.90) and State Trading Corporation Ltd (Face Value: Rs.10, CMP:Rs.172). If we go by the logic the STC should be trading near the price of MMTC which comes around Rs.520, considering Rs.10 as Face Value]

Calcutta, Dec. 29: Coal India will issue another tender for import after the first one floated on November 15 failed to attract a single participant.

A senior official of Coal India said the state-run miner had not scrapped the idea of importing for domestic consumers after the disappointing outcome of the first tender.

“We have not scrapped the idea. The tender will be floated once again shortly,” said the official, adding that the process is likely to be initiated within a month.

Coal India’s first tender was worth Rs 3,000 crore for importing 5 million tonnes.

The imported coal was aimed to bridge the demand-supply gap. Domestic demand is over 600 million tonnes a year, while CIL has set a production target of 482 million tonnes in the current fiscal. CIL produces over 80 per cent of the country’s coal.

However, the miner is likely to fall short of the target as production was affected by cyclone Phailin in October and mining activities in Odisha were disrupted in November.

Overall, in April-November the PSU missed its production target by 5 per cent.

CIL official said the restriction of participants to only public sector companies such as MMTC Ltd and State Trading Corp was one of the primary reasons for the failure of the first tender, besides issues relating to upfront payment to importers.

On whether the fresh tender will allow private players, the official said the option was being considered.

Meanwhile the trade unions of the PSU said they had just deferred and not backed off from a strike against a plan to offload a 5 per cent stake in the miner.

Trade union sources said the divestment was unlikely to take place before the general elections in the first half of 2014.

The preparations to divest a stake have been an ongoing exercise for almost a year, with roadshows held abroad to garner foreign interest in the offering.

Courtesy: The Telegraph