Coal news and updates

Banks feel that a quick auction of coal blocks by the government will stave off bad loans in businesses connected to coal mining. Lenders are, however, awaiting the new price of coal and the impact it will have on corporate margins. 

 

"This (government decision to auction blocks) addresses our concerns to a large extent. The government has taken very concrete steps. We hope these auctions take place quickly within three or four months. We believe that going forward, the fact that the government is looking at import substitution bodes very well for the country considering that we have very large reserves," said Arundhati Bhattacharya, chairman, SBI. 

 

Bhattacharya said banks are waiting to see at what prices the coal will be coming up. "We have to compare this with the cost of coal when we had taken up the project. We will have to see how the new price impacts margins. At this point, it is very difficult to say what will happen," she added. Bhattacharya said banks might have liked a right of first refusal (ROFR) for the current owner of the mines as this would have ensured that things move smoothly, but overall the decision to re-allocate was seen as positive. SBI has a direct exposure to power generating units of Rs 4,300 crore.

 

 

Source: ToI