UK trust warns Coal India of legal action
13 March 2012
Coal India 's second largest shareholder, The Children's Investment Fund (TCI) of the UK is upset with the company for failing to uphold the rights of its minority shareholders. In January this year, the company had hiked the prices of select grades of its coal by changing the pricing system to gross calorific value as against the earlier useful heat value system.
The company had to however, reverse the price hikes under pressure from the coal ministry. This has raised the hackles of partner Oscar Veldhuijzen of TCI who is now considering legal action against the company.
But that is not the sole reason for Veldhuijzen considering the step. He said Coal India was not even opposing adverse government policies like the Mining Bill, which would dent the company's profits.
He is also sore with the recent move by the prime minister's office to get Coal India to sign fuel supply agreements (FSAs) with private power producers to supply coal to them at rates seen as being unfavourable to the company.
He told business news channel CNBC-TV18 in an interview that pricing of FSA coal at a sharp discount to international prices was hurting (Coal India's) profits.
As of 31 December 2011, TCI had a 1.1 per cent stake in Coal India, worth Rs2,156 crore at current market price.