Hindalco Shares Plunge as India Court Orders Further Coal ProbePratap Patnaik and Abhishek Shanker
Hindalco Industries Ltd. headed for its biggest drop in almost four months in Mumbai after an Indian court ordered the federal investigating agency to further probe the involvement of the company, its billionaire Chairman Kumar Mangalam Birla and some others in a case regarding the allocation of coal blocks.
The shares of India’s second-largest aluminum and copper producer fell as much as 7.4 percent, the most since Aug. 25, to 141.85 rupees and traded at 144.50 rupees as of 1:44 p.m. in Mumbai. The benchmark S&P BSE Sensex fell 1.3 percent.
“The share fall is more of a knee-jerk reaction by the market and I don’t see any impact on the company’s operations now or in the future as a result of this court ruling,” Kunal Agrawal, an analyst at BNP Paribas, said by phone from Hong Kong. “We will probably buy Hindalco shares at current levels.”
Special Court Judge Bharat Parashar also asked the Central Bureau of Investigation, or CBI, the nation’s top investigating agency, to record the statement of former Indian Prime Minister Manmohan Singh, who was then coal minister. The case against Hindalco, Birla, a former coal secretary, and others involves the 2005 allocation of the Talabira coal blocks in the eastern state of Odisha to the company.
The case was registered on Oct. 14, 2014 and was followed by searches at various locations in the cities of Mumbai, New Delhi, Hyderabad and Bhubaneswar. In August 2012, the state auditor in a report said that the country’s policy of allocating coal mines without auction may have cost the government 1.86 trillion rupees ($29 billion).