The year 2013 did not bring much to cheer about for most central PSUs operating from Kolkata. For example, the year passed by for Coal India Ltd, waiting for an opportune moment to make a public offer. Another PSU, Hindustan Copper, came out with a public issue in July to divest 4.01% of the government stake. But the offer got a muted response and institutional investors like LIC and public sector banks had to bail out the issue.
There are other PSUs like Burn Standard, Braithwate, Balmer Lawrie, Central Inland Water Transport Corporation Ltd, Hindustan Paper, Hindustan Steel Works Construction, Bengal Chemicals and so on. But none made any impact during the year. Andrew Yule was an exception since it was in its 150th year of foundation and it took new initiatives for diversification just after turning around from sickness.
For CIL, the year 2013 was bad. Its public offer plan could not take off. It fell short of achieving the production and off-take targets. It was slapped with a penalty by the Competition Commission of India. Its consumers created obstruction in signing the fuel sales agreements (FSAs) and it was accused of supplying coal below committed quality. Its share holder TCI continued with a legal battle and the scrip performed below expectations.
It was a year of hard negotiations with the trade unions which had put up resistance against the disinvestment proposal and threatened to go on indefinite strikes. Although the year safely passed without any mining strike, the disinvestment, through which the government was looking to raise R10,000 crore, didn?t take place. All eyes are on CIL to see whether it gives any special dividend to the government. Chairman and managing director S Narsing Rao said the company would give an interim dividend to the government in February 2014, but the amount has not been decided. In 2013 the company paid an interim dividend of 97% of its total paid up capital and 95% a year before.
Production and dispatches remained trouble spots for CIL in 2012 because production till November was 14.97 million short of the targeted 289.38 mt. Offtake till November was 259.87 mt against the targeted 268.78 mt. But it is worth seeing how far CIL can pick up in terms of production with the start of 2014 and how much of the gap it covers between its targeted and actual production by the fiscal end.
Apart from problems in production, the legal battle with its shareholder TCI persisted and the Competition Commission slapped a R1,773-crore penalty on cil for wrongfully using its dominant position as a supplier of fuel in the market. But CIL increased prices twice in 2013?first in May and then in December once again?which would fetch it additional revenue. In November it increased evacuation prices from pit head, virtually effecting another round of price hike.
The biggest problem solved perhaps was the pending FSAs, which became a bone of contention between the supplier and the takers. Takers like NTPC were vocal against the provisions of the FSA and the quality of coal supplied. Finally issues were resolved with CIL bringing changes in its provisions of penalty in the FSA and agreeing to an independent third-party sampling on the quality issue.
Hindustan Copper, while hitting the market with a public offer, also applied for prospecting, mining and reconnaissance permit in Rajasthan, Jharkhand, Madhya Pradesh and Haryana. It has planned to ramp up copper ore production capacity from 3.2 million tonne per annum at present to 12.4 mtpa by FY18 through expansion of its Malanjkhand, Khetri, Kolihan, Surda and Banwas mines.
According to KD Diwan, chairman and managing director of Hindustan Copper, the company this year has started works on four projects and the project for Malanjkhand expansion has got environmental and other required clearances. The PSU also aims to re-open Rakha and Kendadih mines and develop new mine Chapri-Sidheswar mines, which shows that it is poised to fully exploit India?s copper ore demand, that has a large imbalance between smelting and refining capacity.
Andrew Yule & Co Ltd?s engineering division is now foraying into wind energy through a 5 kilowatt roof-top wind turbine. The PSU has also tied up with a Russian company for making big industrial fans. Chairman and managing director Kallol Datta said the company?s capital expenditure plan for FY14 would be spread in engineering and tea, though only R40 crore would actually materialise in the year. The main investment to the tune of around R150 crore would come in 2015 when the company sets up a new electrical equipment plant. The group turnover would cross R1,500 crore by then, Datta said. There are five companies under the group fold, namely Andrew Yule & Co Ltd, Tide Water Oil, Weffil Ltd, Yule Financing, and Hooghly Printing.