In a separate report, CAG had also named Reliance Power, India's second-largest power producer by market value, for unduly benefitting from a government decision allowing the power producer to use surplus coal from its captive block for another project it was not meant for. By using the coal from the same source but charging different tariffs for the power generated at two plants, Reliance had gained, the auditor had said in a report.
A CAG report on aviation had faulted the way the Delhi international airport was privatized in which GMR Infra has 54 per cent stake.
Here's the fallout of the CAG report on some of the companies:
1) Coal India: CAG's recommendations are largely neutral for CIL. Government may decide to urgently ramp-up of production by CIL to meet the demand.
2) Reliance Power: It is developing a 4000 MW project at Sasan in Madhya Pradesh and was allotted three captive coal blocks to fuel the project, which was bid for at a fixed rate to supply power. The company later received government approval to use surplus coal from these blocks for the company's other project - 4000 MW at Chitrangi - which would supply power at a higher tariff than Sasan project.
There is a risk of the Chhatrasal coal block being de-allocated, which might put the Chitrangi power project in doubt. Brokerage firm Nomura said ex-Chitrangi, Reliance Power's fair value is Rs 58 per share.
3) Reliance Infra: Chhatrasal de-allocation will hit the company's potential engineering and construction (E&C) revenue. Bank of America Merrill Lynch had assumed E&C revenue of Rs 3,200 crore in FY'14E and said it will likely hurt Reliance Infra's so cut target price by 18-20 per cent.
4) Adani Power: Risk of escalation/delay in decision making on coal blocks. This might delay re-allocation of Lohara block to Adani for 3.3GW Tiroda project. Tiroda project, which is short on coal linkages, accounts for about 60 per cent of Adani Power.
5) Tata Power: Tubed & Mandakini captive coal mines linked power projects are in early stage. These projects are the key to India growth prospect. Land acquisition is at an advance stage.