India Inc. warns of Hindalco coal case impact on investors

New Delhi, March 12
Reacting to the special CBI court summons to industrialist Kumar Mangalam Birla as an accused in the coal scam case, Indian Inc. on Thursday cautioned about its repercussions "on overall investor sentiment".

"While we have the highest regard for the judicial process, such developments do have a bearing on the overall investor sentiment," the Federation of Indian Chambers of Commerce and Industry (FICCI) secretary general A. Didar Singh said in a statement here.

"At a time when the government is making all efforts to create a transparent, efficient and equitable regime for investments such developments tend to create a needless trust deficit between industry, government and society," he added.

The Confederation of Indian Industry (CII) on Wednesday said such orders can create "uncertainty and anxiety among investors" and dissuade them from investing in the country.

"It is our belief that Birla represents the progressive face of Indian industry, which does not indulge in crony capitalism and carries out his businesses by the book," CII said.

Expressing concern about the trial court order against Hindalco relating to the allocation of Talabira-II and III coal block in Odisha, CII added: "Creation of an atmosphere of uncertainty sends a wrong signal to investors."

Former Prime Minister Manmohan Singh, Birla and former coal secretary P.C. Parakh were summoned as accused by a special CBI court, which observed that the former prime minister was roped into the criminal conspiracy to accommodate Hindalco in the Talabira-II block allocation in 2005.

Hindalco on Wednesday denied that any of its officials had pursued any unlawful or inappropriate means to secure allocation of the Talabira block.

"Hindalco reiterates that none of its officials, including its chairman Kumar Mangalam Birla, have pursued any unlawful or inappropriate means for securing the allocation of the coal block," the company said in a statement.

Hindalco said it "cooperated with investigating authorities completely during the course of investigation" and was confident that it would "stand vindicated at the end of the ongoing legal process".

Aditya Aluminium Project, for which this allocation was made, has been implemented by the company at an investment of over Rs.13,000 crore.

"The plant is already operational even though Talabira-II and III coal block could not become operational for want of clearances. Consequently, Hindalco is having to suffer irrecoverable financial stress," the company said.

Friday will see the close of the second round of e-auctions of cancelled coal blocks. The auctions follow the Supreme Court's decision in September last to cancel the allocation of 204 coal mines allocated between 1993 and 2010.