TCI says legal action against CIL in a week

UK-based hedge fund TCI has said it would initiate a legal action against state-run Coal India (CIL) within a week for failing to protect the interest of minority shareholders.

UK-based hedge fund TCI has said it would initiate a legal action against state-run Coal India (CIL) within a week for failing to protect the interest of minority shareholders.

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"We will file a lawsuit against CIL board within a week or so...," said Oscar Veldhuijzen, a partner at The Children's Investment Fund (TCI).

The development comes close on the heels of CIL getting ready to ink fuel supply pacts with power firms for a minimum assured supply under a Presidential directive.

TCI is the biggest foreign investor in Coal India and has a minority stake in it. It has been accusing the PSU of not protecting minority shareholders' interest and harming the company by not opposing such fuel supply pacts.

TCI has already announced that it has asked its Indian lawyers, Luthra & Luthra, to begin the process of launching legal action against CIL and its directors. Veldhuijzen said TCI believes that large industrial companies had pushed the government to impose new fuel supply agreements (FSAs) on CIL at the cost of the company.

TCI had in a letter to CIL board last week said that the coal prices should be linked to market rates as it would increase Coal India's profitability.

"We estimate that if CIL sells its FSA coal at market price levels, its profits will increase by $19 billion... Indian households consume close to 200 billion units of power per annum, which can entirely be paid for by dividend from CIL," it said in the letter.

Earlier in a letter, it had attacked the company and its board for "not acting independently of India's government".