CCI slaps Rs 1773cr penalty on Coal India

Fair trade watchdog Competition Commission has slapped a fine of Rs 1,773.05 crore on Coal India for allegedly abusing dominant position in supply of the dry fuel - its first major penalty on a state-owned company.

Competition Commission of India (CCI) has found Coal India is operating independently of market forces and enjoys an undisputed dominance the market for production and supply of non-coking coal in the country.

Also Read: CIL signed 157 fuel supply agreements so far

The penalty of Rs 1,773.05 crore was imposed by CCI through an order dated December 9, an official release said on Tuesday.

The ruling has come on complaints filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation against Coal India and its three subsidiaries - Mahanadi Coalfields, Western Coalfields, South Eastern Coalfields.

According to the release, Coal India and its subsidiaries have been found to be "imposing unfair/discriminatory conditions in Fuel Supply Agreements (FSAs) with the power producers for supply of non-coking coal". Such conditions violate fair trade norms.

Apart from issuing a cease and desist order against Coal India and its subsidiaries, CCI has directed modification of FSAs.

Besides, the regulator has asked the company to consult all the stakeholders for making the modifications in the FSAs.

"CIL was also directed to ensure parity between old and new power producers as well as between private and PSU power producers, as far as practicable," the release said.

In recent times, Coal India has drawn flak for fuel shortages that have been hurting the country's power generation.

Coal India stock price

On December 10, 2013, Coal India closed at Rs 285.45, down Rs 4.95, or 1.7 percent. The 52-week high of the share was Rs 372.10 and the 52-week low was Rs 238.35.

The company's trailing 12-month (TTM) EPS was at Rs 13.90 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 20.54. The latest book value of the company is Rs 32.48 per share. At current value, the price-to-book value of the company is 8.79.

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