Govt was not keen to re-appoint CIL's resigned directors

The recent resignations of three independent directors of Coal India (CIL) have been perceived as part of the Narendra Modi-government's drive to review appointments made by the previous government. Sources indicate it was made clear to them that the government was not keen on their re-appointment, which prompted their sudden resignation.

Two of the independent directors - Alok Perti and C Balakrishnan, incidentally former coal secretaries, inducted on the CIL board at the end of 2013 for a period of three years, had resigned earlier this week. Another independent director, Sri Prakash, who joined CIL in February this year for a three-year period, had resigned last week.

When asked about these resignations, Coal India's chairman and managing director A K Dubey said: "It was their personal decision."

Notably, a proposal on the tenure of these directors was to be ratified at the annual general meeting on Wednesday, but was dropped by the company at the last minute.

The Modi government had dismissed four independent directors of Indian Oil Corporation. Nine other appointees of Oil and Natural Gas Corporation, Mangalore Refinery and Petrochemicals, and Hindustan Petroleum Corporation are likely to be removed.

However, in the case of CIL, it is also seen as an attempt to dismiss a defiant board, as the independent directors were the leading voices opposing reduction in e-auction sales in the board meeting last month.

Union coal and power minister Piyush Goyal had earlier announced in the Rajya Sabha that CIL was asked to cut its e-auctions by more than 50 per cent to 25 mn tonnes (mt) in 2014-15 from 58 mt last year, to make more coal available for the fuel-starved power sector. The CIL board, on August 12, stopped short of executing this fearing revenue loss and, rather, decided to send a note to the coal ministry.

After the board meeting, one of the independent directors who has now resigned, had told Business Standard: "The CIL board thinks the company should not cut e-auctions and it would be communicated to the ministry." Goyal, however, later clarified it was not a "directive" but a "suggestion", saying there was a contradiction between the ministry and CIL over the issue. At that point of time, he had said the company board couldn't take such decisions without consulting the government. The Prime Ministers' Office is understood to have intervened in the matter.

One of the CIL directors said, "We are examining the proposal of reducing e-auction sales."

Coal production targets will be met: Acting chairman

On the back of an environmental nod for additional mining activity, CIL said it was confident of meeting the production target for the current financial year.

"We have received environmental nod for additional mining activities in some of our existing mines. The incremental production from these mines will be sufficient to meet the production target this year (read 2014-15)," said acting chairman A K Dubey (pictured) after the company's annual general meeting.

According to him, the additional mining activities would result in an incremental production of at least 10 million tonnes to up to 20 million tonnes from the existing mines.

CIL has produced 176 million tonnes during the April-August period of 2014, which is short of eight million tonnes from its target in the first five months. For 2014-15, CIL production is set at 507 million tonnes.