NTPC slips 6% after it incorporates subsidiary to take up coal mining

Shares of NTPC (National Thermal Power Corporation) slumped 6 per cent to Rs 116 on the BSE, in the intra-day trade on Friday, after the company announced incorporation of NTPC Mining, a wholly-owned subsidiary to take up coal mining business. 

"We wish to inform that NTPC Limited has incorporated a wholly owned subsidiary in the name of 'NTPC Mining Limited' with Registrar of Companies, NCT of Delhi on 29th August 2019 for taking up coal mining business," it said in a BSE filing.

At 12:04 pm, the stock pared its losses partially, and was ruling 4.5 per cent lower at Rs 117 apiece. In comparison, the benchmark S&P BSE Sensex was trading 0.45 per cent lower at 36,901 level. Nearly 3 lakh shares exchanged hands on the BSE.

Meanwhile, shares of Coal India, the biggest supplier of coal to NTPC, were quoting 3 per cent lower at Rs 183 apiece. 

If NTPC develops its own coal mining capability in the next 5-7 years, Coal India risks losing 100-120 million tonne (mt) of coal supply to NTPC, according to a Coal India official. Every year, Coal India supplies around 200 mt of coal to NTPC. READ REPORT HERE

On Wednesday, August 28, the government approved 100 per cent foreign direct investment (FDI) in the coal sector and allowed commercial mining of coal. 

"It has been decided to permit 100 per cent FDI under automatic route for sale of coal, for coal mining activities including associated processing infrastructure... Associated Processing Infrastructure would include coal washery, crushing, coal handling, and separation (magnetic and non-magnetic)," the government said in a statement.