CIL & SUBSIDIARIES SIT ON RS 20K CR SURPLUS FUNDS
By ceoaisra, Section AISRA NEWS
Posted on Mon May 26, 2008 at 01:23:32 AM EST
Coal India Ltd (GIL) and its subsidiaries can buy the Mumbai IPL team almost 42 times, as it has Rs 20,682, crore ($4.8 billion) in surplus funds invested across banks in the country. So what do GIL and its subsidiaries do with so much money? "Nothing," said a senior official from the coal ministry. "The money is far in excess of their need and there is not much use it can be put to," i headded. However, when contacted by a GIL spokesperson said plans are afoot to "invest the money in 119projects that are coming up, setting up 28 coal washeries, forward integration projects with power plants and revival of Durgapur-based Mining & Allied Machinery Corporation (MAMC). "The terminal year of the 11th Five-Year Plan envisages However, GIL is in no hurry for any such move. The lackadaisical manner in which it proceeds was evident when Coal Ventures International (CVT), a special purpose vehicle formed from a joint venture between SAIL, RINL, NMDC, NTPC and CIL, lost out on acquiring coal blocks in Mozambique. Questions have also been raised about the CVTs paid-up equity of Rs 3,500 crore ($810 million), which many believe is far too less to undertake any kind of acquisition a broad. Given that C1L and its subsidiaries alone have $4.8 billion locked up in bank vaults, significant acquisitions, especially in the coking coal sector, could have been made. While state-run Chinese companies always believe that they benefit from a greater size, importance & visibility, GIL and its subsidiaries are nonchalant. KPMG director Nabin Ballodia points out that the money could have been spent on acquiring new technologies. "The current technology with GIL is outdated. Though in terms of equipment it can catch up with the rest of the world, exploration and mining techniques continue to be outdated." With surplus money the size of the country's consumer durables market, GIL and its subsidiaries could have made significant changes to their operations with it. The money can be well spent on R&D and environmental conservation. The amount spent on R&D for the year 2007-08 amounted to a mere Rs 22.54 crore. Environmental measure and subsidence control saw investment of only Rs 31.12 crore last year. Another key area, conservation and safety in coalmines, continued to be grossly under funded. "Safety and infrastructure is a big problem. We do not hear accidents that take place, but our mines are in a very bad state," said Ballodia.
