Government cancels further nine coal blocks; withholds cancellation of six block - Angel Broking

Media reports suggest that the government has cancelled nine coal blocks (in addition to 10 blocks deallocated on February 17, 2014) allocated to 33 firms, and withhold its decision of cancellation of six blocks allocated to 17 companies.

Some of the companies whose coal blocks have been de-allocated include Rajhara North held jointly by Mukund Ltd and Vini Iron & Steel; Tubed held jointly by Hindalco and Tata Power; Rajgamar Dipside allocated jointly to API Ispat and Chhattisgarh Sponge; Bander held jointly by AMR Iron, J K Cement and Century Textiles; and Madanpur North allocated jointly to Ultratech, Navbharat Udyog, Prakash Industries and Vandana Energy. The additional six blocks where the ministry withheld "further action" even as it accepted the IMG's recommendations for cancellation included Rajgamar Dipside held jointly by Monnet Ispat and Topworth Steel; Radhikapur East allocated jointly to Tata Sponge, Scaw Industries and SPS Sponge Iron; and Gare Palma IV/6 held by JSPL and Nalwa Sponge.

The blocks have been cancelled on the basis of a review of 61 mines that had not achieved various milestones. Hindalco's Tubed coal block de-allocation is unlikely to have any material impact on its financials as the company has not committed significant capex for it and we had not factored its impact in our estimates either. Similarly, Prakash Industries Madanpur North block is unlikely to have any material impact on its financials. We continue to await further clarity on coal blocks de-allocation.

Source : Equity Bulls

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