TCI uses NTPC stick to beat CIL, sends another letter on bad mgmt

Written by feBureau | Mumbai | Updated: Apr 6 2013, 05:41am hrs
The Childrens Investment Fund (TCI) has shot off yet another letter to the board of directors of Coal India (CIL), alleging bad management after NTPC said that the coal supplied by the mining major is of low quality.

NTPC, which is also CILs largest customer, has refused to sign a fuel-supply agreement (FSA), saying that the coal is of extremely poor quality and full of stones, boulders and dirt.

Aside from the obvious point that it is extremely bad management to allow such a key customer to become so greatly dissatisfied, it is also indicative of how negligently you, as directors, are doing your jobs that CIL has failed to roll out a comprehensive programme for the use of coal washing, stated a two-page letter signed by TCI partner Mark Derbyshire.

TCI also questioned the directors on the pricing of FSA coal at a time when CILs major competitor SCCL is selling comparable coal to power companies at a premium of 60% to CILs equivalent prices.

How can you claim the proper execution of your duties when such disparities exist, questioned the institutional investor that holds 1.01% in the company.

It also added that the company has provided it with no assurance regarding the theft of good quality coal from CILs mines.

As we have made clear in our suit petition before the high court in Kolkata, we regard this as a very serious breach of directors duties, stated the letter. CIL shares lost 0.55% on Friday to close at R 308.5.