Business This Week – Kumar Mangalam Birla Company Embroiled in Coal-Gate

Only a few days back the CBI quizzed Manmohan Singh how a coal field, located in Odisha, had been handed over to a company owned by Kumar Mangalam Birla. The handover happened during 2005. The company named Hindalco, which deals in aluminum as well, has now been slapped with litigation by the investigative body. The case was filed on January23  after the CBI searched three of the company’s offices in Odisha and Mumbai. The coal block on which the case hinges had been provided to a company called Indal during 1994. Indal was later bought by Hindalco, which is a part of the Aditya Birla Group, which itself  is worth 40 billion dollars.

The case has been registered against the Birla Group in general and certain officers of the government who are yet to be named. Birla has already faced a few questions pertaining to a previous case but there is no surety that he can or will be subjected to an enquiry in this particular case. This is because he has not specifically been named in the same. The previous case had been filed during 2013 and both Birla and PC Parakh were named in the same.

Parakh was Coal Ministry official

At the time the case was registered Parakh was the leading officer of the coal ministry. On that occasion Hindalco had placed bids in order to procure a coal block, which was located in Odisha as well. However, its bid was rejected. It was then that Birla wrote straight to Manmohan Singh, who at that time was directly responsible for the coal ministry. This led to a reversal of the original decision. To begin with the CBI had said that it did not have sufficient evidence and that is why it would want to close the case but then it altered its decision in the court.

The CBI quizzed Birla during December 2014 for the said allocation. The recent case states that during 1993 Indal had mined more than its fair share. This was done so as to obtain the fuel needed to operate the power plant it was running. Normally in India, the assignment of coal blocks is limited only to cement, steel and power plants. It would be worthy to keep in mind that during September 2014 the Supreme Court had annulled the allocation of almost 200 coal blocks by various Governments from 1993.

The apex judicial body in India had cancelled the said blocks because the rights had been given away without a proper and clear plan – there was zero accountability in the entire process. It is assumed that these will be auctioned on the internet, thus adding the much-needed accountability and credibility that had been missing from earlier transactions in the said domain.

NCDs and preference shares for Jaypee from UltraTech

UltraTech Cement, which is included in the Aditya Birla Group, will provide Jaiprakash Associates or Jaypee non-convertible preference shares and debentures. The total worth of the debentures is INR 4,538 crore and the preference shares are worth INR 10 lakh. These will be provided in lieu of the couple of cement units of Jaypee that are located in Madhya Pradesh and had been acquired by UltraTech during December 2014.