March 22 (Bloomberg) -- Jindal Steel & Power Ltd. was set for its steepest drop in almost three years in Mumbai trading after a newspaper, citing a report by the nation’s auditor, named it among companies that received “undue benefits” from the government on coal block allocations.
The shares of India’s biggest steelmaker by market value fell as much as 7.4 percent, the most since April 16, 2009, to 545.55 rupees and traded at 546.85 rupees as of 2:33 p.m. local time. New Delhi-based Jindal Steel was the worst performer on the key BSE India Sensitive Index, which declined 1.7 percent.
Companies, including Jindal Steel, benefited in the allocation of 155 coal fields between 2004 and 2009, the Times of India said, citing a draft report by the Comptroller & Auditor General. Allocations valued at 4.79 trillion rupees ($94 billion) went to private companies and 5.88 trillion rupees went to government-owned companies, the newspaper said, citing the report.
“There is a concern regarding the auditor’s report and the market thinks there can be some action against the company, leading to the sell-off today,” said Niraj Shah, an analyst at Fortune Equity Brokers India in Mumbai. He has a hold recommendation on the stock.
Sushil Maroo, chief financial officer at Jindal Steel, didn’t answer three calls made on his mobile phone seeking comment. Spokesman Vivek Sharma declined to comment.
Indian lawmakers disrupted proceedings in parliament today, demanding a government response to the report that said the loss from coal block allocations was six times higher than a phone license scandal that sparked the country’s biggest graft probe.
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