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Three little-known private companies — Castron Mining, Fieldmining & Ispat, and Domco Smokeless Fuel — are the first casualties of the coal block allocation scam. Based on the recommendations of an inter-ministerial group (IMG), the Coal Ministry today de-allocated four coal blocks, and encashed/issued warnings on the bank guarantees of two companies — Veerangana Steel and Monnet Ispat and Energy.
Industry observes feel this is just the tip of the iceberg. For almost two weeks, the monsoon session of Parliament was stalled after the Opposition demanded Prime Minister Manmohan Singh’s resignation based on the findings of the Comptroller and Auditor General’s report on Coal Block Allocations. The report said that the Government lost Rs 1.84 lakh crore by not auctioning the coal blocks.
While Castron Mining, Fieldmining and Ispat and Domco Smokeless Fuel face de-allocation, Veerangana Steel will have to forego nearly Rs 2.5 crore, a part of its bank guarantee for three blocks. Further, Monnet Ispat and Energy has been asked to deposit about Rs 90 crore of bank guarantee. If Monnet fails to commence production from the Utkal-B2 block in Odisha by March 2013, its bank guarantee will be forfeited.
Barring Monnet, little is known about the other companies. They are neither listed on the bourses nor do they have an operational Web site. Monnet Ispat and Energy, is a subsidiary of the Monnet Group, promoted by Sandeep Jajodia. When Business Line contacted Castron Mining’s Mumbai office, it was told that: “We are asked not to give any information to anybody.”
The IMG decided to de-allocate the blocks after it found that work on the end-use plants to be set up by these companies has not progressed. On the other hand, Veerangana and Monnet missed achieving certain milestones and thus face loss of bank guarantees.
These companies also figured in the list of 57 companies that the CAG named in its recent report on coal block allocation.
However, none of them has been named till now by the CBI in its first set of FIRs, alleging that companies have obtained coal blocks through false means. The agency is probing the allocation of 64 blocks. It is yet to be seen if the blocks given to big corporate houses and linked to politicians face de-allocation. Coal Ministry officials expect the IMG to recommend more mines for de-allocation and forfeiting of bank guarantee after it meets again on Friday.
The panel has already met several times. It also gave one last hearing to mine-owners in a three-day marathon from September 6-8. A set of private companies, including Reliance Power, Jindal Steel Power Ltd, Tata Sponge Iron Ltd, Bhushan Steel & Strips Ltd, GVK Power & Infrastructure Ltd, Arcelor Mittal India Ltd and DB Power Ltd, presented their cases to the IMG.
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