X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
Coalgate to haunt Tata's? 
(Mon, 29 Oct Pre-Open) 
 
Coal allocation scam or Coalgate has been referred to as the mother of all scams. Between 1993 and 2011, the government of India gave away 206 coal blocks for free to government and private companies. The Comptroller and Auditor General (CAG), in their report, estimated that the losses due to this policy of the government giving out coal blocks for free amounted to Rs 186 trillion. This policy created a windfall for private developers who secured public resources at rock bottom prices.

One such example was of Tata Steel. The company has been allocated a captive mine before independence for an annual rent of Rs 3,250. According to various media reports, Tata Steel has a 999-year lease on a captive coal mine in Jharkhand's Ramgarh district, but the company is allegedly using a part of this coal for commercial sales. It is hard to believe that the company holds 999 year lease because under the Mines and Minerals Development and Regulation Act (MMDR) which came into force in 1957, even leases granted before independence are subject to a 30 year limit.

The company is also alleged to have avoided royalty payments, but has since agreed to pay up. Under the MMDR Act, Tata Steel is supposed to pay royalty on the quantity of coal removed or consumed from the leased area. But actually the company was paying the royalty on the production of coal in the leased area.

Although these are all allegations and investigations are yet to be completed, one thing is clear, the whole scandal surrounding the coal block allocation is a perfect metaphor for how everyone from politicians to bureaucrats to business barons to power brokers are milking India behind the smokescreen of due process and a larger accountability to Parliament.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "Coalgate to haunt Tata's?". Click here!

  
 

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jul 21, 2017 (Close)

MARKET STATS