Shares in Naveen Jindal-promoted Jindal Steel and Power crashed as much as 24 per cent after the Central Bureau of Investigation registered a first information report against the duo for allegedly misrepresenting crucial information to land valuable coal fields from the government.
Shares in Naveen Jindal-promoted Jindal Steel and Power crashed as much as 24 per cent after the Central Bureau of Investigation registered a first information report against the duo for allegedly misrepresenting crucial information to land valuable coal fields from the government.
The FIR against his company lists cheating and conspiracy as charges.
Minister of State for Coal Dasari Narayan Rao has also been named as accused by the CBI. Sources in the CBI allege that Mr Jindal's firm provided kickbacks to Mr Rao in exchange for coal licenses. Mr Jindal's home and offices were raided this morning by the CBI.
"JSPL, as a law abiding company, is governed by a strong ethical code of conduct," said Manu Kapoor, Jindal Steel's head of external affairs. "This is an ongoing CBI investigation into coal block allocation. At this stage of investigation, JSPL is committed to fully cooperate with CBI."
The CBI has said that coal licenses between 2004 and 2009 were assigned by a committee that did not conduct adequate background checks on firms and made allocations without transparency.
In March last year, a report by the government's auditor criticised the allocation of 155 coalfields to about 100 private and some state-run firms. The Indian subsidiary of ArcelorMittal and steel makers Tata and Jindal Steel and Power, are among the companies named in the report.
Corporate lawyer HP Ranina said Mr Jindal will be called for questioning. The CBI will be investigating the matter further before a charge sheet is filed, he added.
Reasons for sharp selloff:
Jindal Steel and Power was the top loser on the 50-share Nifty benchmark, with the stock closing 15 per cent lower at Rs 226.15. (Track stock)
Market analyst Sarvendra Srivastava said the sharp fall has resulted in a big damage to the stock, but traders should not short the stock.
Metal analysts told NDTV that post the FIR the risk of mine de-allocation has increased for JSPL, whose high profitability was driven by captive coal mines. The FIR against promoters can lead to structural de-rating.
"Investors don't want to own stocks with perceived governance issues," an analyst told NDTV.
Other metal companies such as Tata Steel, Jindal Stain, Uttam Galva and SAIL traded with deep cuts post the development. The ongoing investigation is likely to lead to slower/stricter clearances in the coal sector, which will adversely impact sector growth, analysts said.
Hindalco and Tata Steel are some of the big companies waiting for clearance of coal blocks.
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