Shares of Aditya Birla Group companies fell to a three-month low on Tuesday after the Central Bureau of Investigation registered a case against Group Chairman Kumar Mangalam Birla for alleged irregularities in allocation of coal mining rights in 2005.
The charges relate to criminal conspiracy and corruption in the allocation of a captive coal block in 2005 in Orissa, which was primarily meant for public sector firms. The investigation agency has alleged thatthe block was allocated to Neyveli Lignite and Mahanadi Coalfields (both PSUs) in 2005 but sometime in the middle of the year Birla met Parekh after which the earlier decision of the screening committee was overturned and Hindalco was also accommodated along with the two.
CBI has booked Birla as a representative of AV Birla Group and its group company, aluminium maker Hindalco.
The CBI claims Hindalco did not meet the criteria for being awarded a mining lease but theAV Birla Group, on its part, has strongly denied the charges stating that every process stipulated under the coal allocation policy by the government were followed.
"This relates to media reports on an FIR naming Hindalco and our chairman on the coal issue. Apparently, this seems to be part of a larger case entailing coal allocation to companies, and being one of the companies, we are being investigated also. We wish to state unambiguously that we have followed every process required for allocation of coal completely, as stipulated by the government policy," group company Hindalco said in a statement.
The denial comes after shares of Hindalco fell about 5 percent in morning trade on Tuesday, while stocks of other group companies like Idea Cellular and AB Nuvo were also impacted.
Hindalco Industries' scrip had tanked 4.97 percent to Rs 105.10, while Aditya Birla Nuvo had fallen by 4.16 percent to Rs 1,209.90 and Idea Cellular lost 1.35 per cent to Rs 182.45 on the BSE. Among others, shares of Grasim Industries Ltd fell by 1.18 per cent, while Aditya Birla Chemicals was down 1.42 per cent and Aditya Birla Money shed 3.71 percent.
According to reports, the CBI has discovered that Birla had met former coal secretary P C Parekh, to push for the allocation of the Talabira II coal block in Odisha's Jharsuguda district in the second half of 2005.
The Talabira II coal block has reserves of about 153 million tonne. It was allotted to Hindalco, along with the other two PSU, for captive power production of 900 MW for its greenfield aluminium project in Orissa.Talabira II is crucial for Hindalco's Aditya Aluminium, which has investments in a 4.2 million tonnes bauxite mine, 1.5 million tonnes alumina refinery and a 359,000 tonne smelter.
"CBI has alleged Birla's company was accommodated in the said coal block, though the provisions allowed allocation only to public-sector companies. The screening committee's recommendations were overturned, abusing the official position, to give favours to Hindalco," the Business Standard reported, quoting a senior CBI official.
Hindalco managing director Debu Bhattacharya however clarified in a statement that the application for the Talabira II mine (for which CBI filed the FIR) was made in 1996 by Indal, the Indian subsidiary of Alcan, the Canadian aluminium major. Indal was acquired by Hindalco in 2000, which subsequently pursued the matter.
"The reality of the matter is very different from what has been projected... The actual allocation of the mine was done in November 2005, which is nine years after the first application was made," said Bhattacharya, adding that Hindalco made several representations to the government but only through "formal channels".
"To imply that our chairman, Kumar Mangalam Birla, managed to overturn the decision of the screening committee is preposterous. The truth of the matter is that the Talabira II and III mines together have been finally allotted jointly to Mahanadi Coal Fields and Neyveli Lignite, both public sector undertakings, with Hindalco having only a 15% stake in the joint venture," said Bhattacharya.
The project for which this mine was allocated is ready to be commissioned later this month, while the clearances to permit mining have not been received so far, he added.
Apart from Hindalco, an FIR has been filed against government-owned National Aluminium Company Ltd (Nalco), too. But Nalco said, through a notification to BSE, that it had no information about any FIR filed against the company on allocation of the Utkal-E coal block in Odisha.
The CBI has so far lodged 14 cases against individuals and firms including other high profile industrialists like Naveen Jindal and his company JSPL, Kumaramangalam Birla, Congress MP Vijay Darda and his brother Rajendra Darda, JLD Yavatmal Energy Limited, AMR Iron & Steel Private Limited, Vini Iron & Steel Udyog among others.
A Standing Committee report has suggested that allocation of all coal blocks between 1993 and 2008 was unlawful, seeking licenses of those mines where production hadn't started to be cancelled, in effect indicting both the NDA and UPA regimes.
Published Date: Oct 16, 2013 11:15 am | Updated Date: Dec 20, 2014 11:29 pm