News Column

Coal India scrip surges on reform buzz

May 22, 2014

SHARES of Coal India Ltd on Thursday surged to a three-year high during intraday trade on the back of the proposed plans for the new government to radically revamp the poorly performing behemoth.

The stock was among the top gainers on the Nifty, rising as much as 8.22 per cent in early trade to ` 401.40, the highest since August 2011. The stock finally settled 5.37 per cent higher at ` 390.80.

In terms of volume over one crore shares of the company were traded at the NSE during the day while 13.88 lakh shares of the company changed hands at the BSE. CIL's stock rose by 4.78 per cent to settle at ` 389.95 on the BSE. During the day, the scrip climbed 7.75 per cent to ` 401, its 52-week high.

Modi wants to fix India's inefficient coal sector quickly to improve electricity supply across the country.

Coal generates more than half of the country's power and is the cheapest form of energy.

According to BJP sources, any reform will begin with Coal India, which accounts for 80 per cent of India's total coal output but has failed to meet its output targets for years.

Corruption, red tape, land acquisition problems and the holding back of environmental clearances has seen the country's mining output shrink and made it one of the largest importers of coal despite being abundantly endowed with the raw material.

Reuters quoted a member of the BJP's economic policy team as stating that Prime Minister-elect Narendra Modi is exploring breaking up state behemoth Coal India Ltd and opening up the sector to foreign investment to boost output and cut imports.

Coal India chairman S. Narsing Rao has already announced that he will be quitting his post to take up the job of principal secretary to Telangana chief minister K. Chandrasekhar Rao.

Meanwhile, consultancy firm Deloitte is likely to take more time to submit its final report on restructuring of CIL as the draft has to be seen by the next government led by Narendra Modi.

CIL's stock rose by 4.78% to settle at ` 389.95 on the BSE Flipkart snaps

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Source: Mail Today (India)

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