Move seen as government's bid to remove those who were appointed during the previous UPA regime and who are being seen as being part of a defiant board
As Coal India Ltd (CIL) shareholders meet for the annual general meeting today, three of the company's independent directors have resigned, triggering speculation that the government has kick-started the process of removing those who were appointed during the previous UPA regime and who are being seen as being part of a defiant board.
The company board had opposed some of coal ministry's moves like cutting down on e-auction of coal that will adversely impact Coal India's profitability.
While Alok Perti and C Balakrishnan resigned this week, CIL said on Tuesday, another independent director Shri Prakash put in his papers the previous week.
Sri Prakash was member (traffic) of Indian Railways while Alok Perti and Balakrishna had both served as coal secretaries.
With three of the directors resigning, proposals to reappoint them for another term already communicated to shareholders has turned infructuous.
For sometime, the impact of possible reduction in e-auction is being hotly debated within CIL's board, and as latest in August when it met to approve the quarterly financial results of the company, The board decided not to abide by the government's directive and sent a note to the coal and power ministry conveying that cut in e-auction coal will lead to revenue loss and also create problems for a section of customers who buy coal from e-auction, including some power utilities.
The issue was taken up by the board after government asked it to halve the e-auction quantity from the usual 10% of total yearly sales to 5% this year.
Even as CIL officials were too eager to share the information about sending that note, minister Piyush Goyal upped the ante telling journalists that the company board couldn't take such decisions without consulting the government and that a cut in CIL's e-auction volumes is almost a done deal and that higher e-auction can't be supported as one company's profits can't be more important than the greater good of the economy (read availability of cheaper coal for power plants).
But clamour for reduction in e-auction has been growing as power sector suffered due to stagnant coal supplies even as the PSU miner minted profit from higher auction prices.
"But with lower allocation to e-auction, non-institutional customers like small scale sector will suffer," a CIL official said.
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