Monnet Ispat faces Rs 235-250 cr liability after SC order

Monnet Ispat & Energy today said it will have to bear a liability of Rs 235-250 crore following the Supreme Court's judgement on coal block allocation.
The Supreme Court had earlier quashed allocation of 214 out of 218 coal blocks alloted to various companies since 1993.
"The Court has imposed penalty by way of additional levy of Rs 295 per metric tonne on the coal extracted so far and the coal that will be mined till transfer of ownership to Coal India till about March 31, 2015. This will translate into an estimated liability of around Rs 235-250 crore towards coal extracted/to be extracted to be payable over a period of three months," the company said in a filing to BSE.

Monnet Ispat & Energy further said on the operational front, the company will take a hit on the operating margins to the extent of margin saved by it from the captive coal blocks vis-a-vis had the coal been obtained from outside.
"However, at the moment it would be difficult for us to assess erosion in the profitability of the company as the same would depend on actual coal to be obtained from the outside sources, fresh linkages or allotments in future," it said.
The company said that it was still assessing the impact of the judgement, adding that the estimation of impact is not simple since the total impact will depend on numerous outside factors that will emerge in future which are beyond the control of the company.

Monnet Ispat & Energy said that it had a coal block at Milupara, Raigarh that was in operation since 2004 for captive consumption for company's Raigarh operations also compromising of 1.5 million tonnes integrated steel plant. So, far the company has extracted approximately 8 million tonnes of coal.

Further, Mandakini coal block that was alloted to three joint venture partners (Tata and Jindal Photo) besides the company and was linked to 1050 mw power plant also stands cancelled, it said.
However, the company has applied for the coal linkages which is under the consideration of the government, it said.
In a major blow to the corporate sector, the Supreme Court had on September 24 quashed allocation of 214 out of 218 coal blocks alloted to various companies since 1993 terming it as "fatally flawed" and allowed the Centre to take over operation of 42 such blocks which are functional.

A bench headed by Chief Justice R M Lodha said that its judgement is intended to correct the wrong done by the Centre over the years and to send a message to Government not to deal with the natural resources as if they belong to a few individuals who can fritter them away at their sweet will.
The bench, also comprising justices Madan B Lokur and Kurian Joseph, directed the the allottees of coal blocks to pay within three months an additional levy of Rs 295 per metric ton of coal extracted to compensate financial loss caused to the exchequer by the illegal and arbitrary allotments.