On March 2, Coal Pulz Private Ltd, a private company registered in October 2020, won the bid for the Namchik Namphuk coal mine in Arunachal Pradesh. With nearly 15 million tonnes of geological coal reserves, Namchik Namphuk is the largest commercial coal mine in northeast India, producing one of the finest qualities – Grade 4-5 – of coal.

But Coal Pulz’s win is now shrouded in controversy.

First, it’s linked to a company that is being investigated by the Central Bureau of Investigation for alleged irregularities in supply of coal.

Second, there is evidence that it violated the union coal ministry’s bidding rules. 

In 2022, the same mine had been auctioned and the winning bid went to a company called Platinum Alloys Private Ltd. It defaulted in paying the government its dues so the mine was auctioned again. 

Platinum Alloys participated in the second bid too. Coal Pulz won. But it also has links to Platinum Alloys, which violates the standard tender rule barring affiliated companies from bidding on the same mine. 

Here’s what we found.

A web of controversy

Namchik Namphuk was auctioned in November along with 28 other coal mines in what the government called “the biggest tranche of auction of commercial coal mines”. 

Coal Pulz was one of six companies that participated in the bid for commercial mining of Namchik Namphuk. The other five were Assam Mineral Development Corporation Ltd, Platinum Alloys Private Ltd, Arunachal Pradesh Power Corporation Private Ltd, Prachi Infra & Roads Private Ltd, and Start Cement.

The auctions witnessed “strong competition with a lot of first-time bidders in this round”, the coal ministry said in a press release. “This also signify that the reforms brought in by the government in the coal sector through the introduction of commercial coal mining have been well received by the industry.”

On the same day, Economic Times reported that a “consortium” of Satyam Group and Mahalaxmi Group – “two major industrial groups of eastern India” – had “won the auction” for Namchik Namphuk.

Coal Pulz is part of the Mahalaxmi Group, as the latter’s executive director, Sanjay Kedia confirmed to Newslaundry. 

The Mahalaxmi Group has been a constant donor to the BJP, featuring 19 times in the party’s donor list for 2021-22 and donating a total of Rs 7,45,01,000 through its group of companies. Its group company, Mahalaxmi Continental Private Ltd, featured six times in the same list donating over Rs 2 crore.

Mahalaxmi Continental was named in two cases over alleged coal-related irregularities. The CBI filed its chargesheets in the cases in 2012 and 2016, respectively. The first case named the company and its director Naveen Kumar Gupta for allegedly selling Coal India-allotted coal in the open market instead of to stipulated beneficiaries. The second case was related to irregularities in the purchase of coal for the Cachar paper mill in Assam’s Hailakandi district. Both cases are still being investigated.

Now, what about its consortium member Satyam Group?

Satyam Group has direct and indirect ties with Platinum Alloys, which won the bid in 2022 and participated again in the bidding for 2023. At least four of Satyam Group’s directors hold shares in Platinum Alloys through various shell companies. 

Satyam Group’s chairman Ratan Sharma was a director at Platinum Alloys from 2009 to 2013. During this period, he was also a director and largest shareholder – holding 43.5 percent – of National Mining Company Private Ltd. In 2014, National Mining’s contract with Arunachal Pradesh Mineral Trading & Development Corporation Ltd, to extract and sell coal from Namchik Namphuk, was deemed “illegal” by the Supreme Court.

We’ll discuss this in detail later in the report. 

At present, Ratan Sharma does not hold direct shares in Platinum Alloys. But he holds 15,500 shares at SMS Smelters Private Ltd, which is a majority shareholder – 69.6 percent – of Platinum Alloys.

Four personnel at Satyam Group – directors Harsh Sharma and Kamal Sharma, managing director Suresh Sharma, and senior executive Shyam Sunder Latta – own shares of Nishu Leasing and Finance Ltd, a 19.6 percent shareholder of Platinum Alloys.

Platinum Alloys’s other directors include Rama Sharma, who is also director of a company called Satyaratan Group Ltd. Satyaratan Group’s directors are Latta and Mamta Sharma. Mamta Sharma is also a director of the Ratan Sharma-owned National Mining Company Ltd. 

Clause 4.1.4 of the coal ministry’s standard tender document clearly says a bidder can submit only one bid for a particular coal mine. “In case an affiliate(s) of a bidder also submits a bid for the said coal mine, the bids submitted by both the bidder and its affiliate(s) shall be rejected.”

Newslaundry contacted the coal ministry for comment. At least two officials said they were not authorised to speak to the media and so could not speak on the record. 

One official said allowing Platinum Alloys to bid in 2023 despite being a defaulter did not violate tender rules. Another said the coal ministry had checked the directors of companies before the bidding but did not find any connections between Platinum Alloys and Coal Pulz.

‘Anomalies’ flagged by CAG

The other irregularities at play involve Ratan Sharma. He’s an old business acquaintance of Arunachal Pradesh chief minister Pema Khandu. Both were directors of a now struck-off company, Selatawang Hotel Private Limited, in 2009. 

Before the resumption of operations in 2022, the last coal extraction exercise in Namchik Namphuk coal mine took place between 2007 and 2012. At the time, the central government allotted the mine to the state-owned Arunachal Pradesh Mineral Trading & Development Corporation Ltd.

APMTDCL then engaged National Mining Company Private Ltd as a contractor for the extraction and sale of coal in Namchik Namphuk coal mine for five years, from 2007 to 2012. National Mining was started in 2002 and is registered in Shillong, though company documents also list an address in Guwahati. As reported earlier, Ratan Sharma holds 43.5 percent shares.

During these five years, APMTDCL through National Mining extracted over 10,00,000 metric tonnes of coal from the mine until 2012, when operations were suspended on suspicions of “insurgents” mining coal in the area.

In 2012, the comptroller and auditor general of India filed an audit report highlighting “gross anomalies” in the allocation of coal blocks since 1993. The report estimated financial gains of Rs 1.83 lakh crore to private coal block allottees due to the lack of competitive bidding in the allocation.

So, in 2014, the Supreme Court declared 204 coal block allocations made from 1993 to 2011 as “illegal” and “arbitrary”. This included the Namchik Namphuk mine. 

Based on the CAG report, the Supreme Court imposed a levy of Rs 299 per metric tonne of coal on allottees. APMTDCL, as the original allottee of Namchik Namphuk, was imposed a levy of Rs 32 crore. 

This amount would later be paid from the public exchequer when the Pema Khandu-led state government announced an interest-free loan of Rs 32 crore to APMTDCL in its 2019-20 budget to “revive” the Namchik Namphuk coal field. An FIR was later filed against the Arunachal government for leveraging National Mining by paying the amount from the public exchequer. 

The FIR, filed on the basis of a complaint from advocate Kaku Potom, alleged that as per the clause 13 of the articles of the agreement between National Mining and APMDTCL and the work order awarded to NMCL, the contractor or NMCL was liable to pay all taxes, levies and additional levies and duties, etc.   

The CAG flagged another anomaly related to coal pricing at Namchik Namphuk in a report in 2017. National Mining was only permitted to sell and extract coal at the price fixed by APMTDCL, which in turn would fix the price on the basis of sale prices notified by Coal India Ltd.

But the CAG said National Mining was selling coal “at a much lower rate” than the revised rates notified by Coal India Ltd, since APMDTCL was not implementing the revised rates on time. 

For instance, Coal India revised the sale price of coal from January 1 onwards in 2012. This was only implemented by APMDTCL from January 11, 2013. This 11-month delay cost the public exchequer Rs 31 crore against the sale of 1,55,677 metric tonnes of coal between January 1 and May 19, 2012.

National Mining blamed APMDTCL for the delay in notifying the revised prices and therefore refused to pay the amount of Rs 31.57 crore. Instead, it agreed to pay only Rs 11.69 crore against the sale of 54,640 metric tonnes of coal from April 4 to May 19, 2012. A five-member committee investigated the issue and ruled in favour of National Mining, recommending that the remaining Rs 19.88 crore be foregone.

Newslaundry sent questionnaires to Satyam Group, Coal Pulz and Platinum Alloys. This report will be updated if we receive a response.

Update on March 19: The size of the Namchik Namphuk coal reserves is 15 million tonnes, not 15 metric tonnes. This has been corrected. The error is regretted.