Jindal Steel loses on coal controversy again

Jindal Steel and Power finds itself amongst the top three losers on the BSE, down over 4% at Rs.182 though volumes remain a bit muted.

The stock has tanked on news reports emerging that the company might lose two mines that it won in the first round of phase I of the auctions. The bid has come under a scanner due to extremely low prices quoted by the company and there is talk of alleged rigging. The reports emerging allege that bidding, for most blocks began in the noon and ended by late night but for Gare Palma IV/2&3, the one where Jindal bid, the bidding began at the right time, noon, but was all over in just 45 minutes and most competitors withdrew their bids. This is said to be cartelization amongst the bidders.

If this does get cancelled, it would affect Jindal Stee as this coal block is crucial for its power plant, which runs on the coal extracted from this mine. Power agreements have already been signed with Tamil Nadu and Karnataka and cancellation will dent profits.