InvestorQ : How do you see the impact of Vedanta and Hindalco winning coal blocks in the auctions?
Dawn Cherian made post

How do you see the impact of Vedanta and Hindalco winning coal blocks in the auctions?

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Mitali Bhutta answered.
6 months ago
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In the coal auctions that have just opened, Indian private sector names like Vedanta and Hindalco are among the key beneficiaries. The new coal auction policy allows the private players to own and operate coal mines without any end use restrictions.

Vedanta and Hindalco were among the early private Indian companies chosen by the government through auction bidding process to operate coal mines without end-use restrictions. The government had allocated a total of 38 mines for auction to the private players

These mines would go to the company that makes the highest royalty bid payable to the government. The first stage was the technical bid which was then followed by the financial bid. Only after this two-stage process, the companies are allowed to own the mines.

One trend was that the demand was strong as in all the cases of winning bids assured royalty to the government was above 10%. In fact, in some cases it even went as high as 25-30%, which is extremely lucrative to the government.

On the first day of the auction, the government firmed up final offers for 5 mines with total annual production capacity of 13.75 million tons. It is anticipated that once this auction is done, coal shortage may become a thing of the past in India.

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