Coal India declined 1.98% to Rs 292.15 at 9:45 IST on BSE after the Competition Commission of India issued order against the company and its subsidiaries for abusing dominant position.
Ministry of Corporate Affairs made the announcement after market hours on Friday, 24 March 2017.Meanwhile, the BSE Sensex was down 69.70 points, or 0.24%, to 29,351.70.
On the BSE, 92,157 shares were traded in the counter so far, compared with average daily volumes of 3.56 lakh shares in the past one quarter. The stock had hit a high of Rs 294.70 and a low of Rs 290.55 so far during the day. The stock had hit a 52-week high of Rs 349.85 on 17 August 2016. The stock hit a 52-week low of Rs 272.05 on 12 April 2016.
The stock had underperformed the market over the past 30 days till 24 March 2017, falling 9.27% compared with the 1.83% rise in the Sensex. The scrip had also underperformed the market in past one quarter, rising 3.45% as against Sensex's 12.98% gains.
The large-cap company has equity capital of Rs 6316.36 crore. Face value per share is Rs 10.
The Competition Commission of India (CCI) has found Coal India (CIL) and its subsidiaries to be in contravention of the provisions of section 4(2)(a)(i) of the Competition Act, 2002 for imposing unfair/discriminatory conditions in fuel supply agreements (FSAs) with the power producers for supply of non-coking coal.
The final order has been passed on a batch of informations filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation against Coal India and its subsidiaries (Mahanadi Coalfields, Western Coalfields, South Eastern Coalfields).
The order has been passed by CCI pursuant to the directions issued by Competition Appellate Tribunal remanding the matter back while setting aside the original order of CCI in which a penalty of Rs 1773.05 crore had been imposed upon CIL. After hearing the parties afresh in terms of the directions issued by Competition Appellate Tribunal, CCI held that CIL through its subsidiaries operates independently of market forces and enjoys dominance in the relevant market of production and supply of non-coking coal in India.
CCI noted in the order that CIL did not evolve/draft/finalize the terms and conditions of FSAs through a bilateral process and the same were imposed upon the buyers through a unilateral conduct. CCI found CIL and its subsidiaries to be in contravention of the provisions of section 4(2)(a)(i) of the Competition Act, 2002 for imposing unfair/discriminatory conditions in FSAs with the power producers for supply of non-coking coal.
Apart from issuing a cease and desist order against CIL and its subsidiaries, CCI has directed modification of FSAs in light of the findings and observations recorded in the order. The impugned clauses related to sampling and testing procedure, charging transportation and other expenses for supply of ungraded coal from the buyers, capping compensation for supply of stones etc.
For effecting the modifications in FSAs, CIL has been ordered to consult all the stakeholders. CIL has also been directed to ensure uniformity between old and new power producers as well as between private and PSU power producers.
Further, CCI has imposed a penalty of Rs 591.01 crore upon CIL for the abusive conduct. While reducing penalty, CCI noted the steps taken by CIL to improve the sampling procedure even post-passing of the original order by CCI.
However, while holding the extant sampling procedure as unfair, CIL has been directed to incorporate suitable modifications in fuel supply agreements to provide for a fair and equitable sampling and testing procedure besides considering the feasibility of sampling at the unloading-end in consultation with power producers and adopting international best practices.
Meanwhile, Coal India announced that the board of directors of CIL in a meeting on Sunday, 26 March 2017, approved payment of 2nd interim dividend for the financial year ending 31 March 2017 (FY 2017) at Rs 1.15 per share as recommended by the audit committee of CIL in its meeting held on date. The date of payment of 2nd interim dividend is on and from 31 March 2017.
Coal India's consolidated net profit fell 20.3% to Rs 2884.47 crore on 3.9% rise in net sales to Rs 19704.45 crore in Q3 December 2016 over Q3 December 2015.
Coal India (CIL) as an organized state owned coal mining corporate. The government of India held 79.78% stake in the company as per shareholding pattern as on 31 December 2016.
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