Naveen Jindal-owned Jindal Steel & Power (JSPL), Mr Kumar Mangalam Birla-promoted Hindalco Industries, Manoj Gaur's Jaiprakash Power and Sanjiv Goenka-led CESC are among the seven firms that will lose access to their producing coal blocks after the Supreme Court's landmark judgment on Wednesday to cancel 214 of the 218 coal blocks, terming their allocation 'illegal'.The other companies that will lose their producing coal assets include Monnet Ispat, Prakash Industries and Usha Martin. These seven companies lose a combined coal mining capacity of over 20 million tonnes per annum.
On expected lines, the stock markets fell 215 points in mid-day trades after news of the SC verdict came out, before ending flat. Some of the biggest losers were steel and metal stocks. As much as INR 4 lakh crore ($66 billion) worth of investments in developing coal mines, steel and power units are at stake.The biggest loser is JSPL as it will have to part with Gare Palama 1, 2 and 3 blocks, which produce 12 mtpa of coal (see table). Hindalco Industries will lose its Talabira mine 1 with a capacity of producing 2.3 mtpa of coal.Mr Kumar Mangalam, Aditya Birla Group chairman, said that "The Supreme Court has given a judgment on the de-allocation of mines. There is six months transition time before the reallocation. Crores of investments have been made by many companies in these mines. The government will certainly have a plan in mind, clarity of which will come in a few days."
These companies will also have to cough up royalty at the rate of INR 295 per tonne for all the coal mined from these blocks till date.Mr Amar Ambani, head of research at IIFL, said that "The impact of this verdict would be the highest on JSPL and Hindalco in the metals space."According to analysts, JSPL alone is expected to fork out INR 3,000 crore as royalty while Hindalco's burden is pegged at INR 600 crore.Mr Debasish Mishra, senior director at Deloitte India, said that the government needs to expeditiously devise the parameters of coal block bidding and start the process as soon as possible to ensure minimum disruption for affected companies.Besides Hindalco, TATA Steel, Usha Martin, JSPL, Balco, Nalco, JSW Steel and Monnet Ispat will also lose their coal mines. These companies have heavily invested in these mines and the production was likely to start soon.