Jindal Steel shares Slumps After India slaps corruption charges over Coal India Scam

30 April 2015

Indian steel producer Jindal Steel & Power Ltd. tumbled to its lowest level in four months in Mumbai trading after the Central Bureau of Investigation filed charges against the company, its owner Naveen Jindal and 13 others.

The shares fell as much as 7.4 percent to 135 rupees, their lowest since December, and traded at 140.25 rupees as of 11:54 a.m. in Mumbai. The stock has fallen 7.7 percent this year compared with an 8.4 percent decline in the S&P BSE India Metal Index.

“The charge-sheet has been filed,” CBI spokeswoman Kanchan Prasad said Wednesday, without giving more information. The case relates to the allocation of the Amarkonda Murgadangal coal block in the eastern state of Jharkhand, the federal investigating agency said in a statement on its website.

Jindal Steel denied all allegations in a statement.

Charges were also filed against former coal secretary H.C. Gupta and former junior minister Dasari Narayana Rao for alleged criminal conspiracy in the allocation of the block, the Press Trust of India reported Wednesday, citing CBI officials it didn’t identify.

Jindal’s group was among the biggest beneficiaries when the government gave away 218 coal mines to companies for their own use in a program that began in 1993. The former Congress party lawmaker built a steel and energy group fueled by the coal from the mines.

The federal auditor in August 2012 said giving away the coal mines, instead of auctioning them off, cost the exchequer 1.86 trillion rupees ($29.3 billion). In September last year, the nation’s Supreme Court canceled most of the permits, terming the allocations arbitrary and illegal.