Is Singareni heading to financial crisis?

By Newsmeter Network  Published on  22 Sep 2019 9:37 AM GMT
Is Singareni heading to financial crisis?

Hyderabad: According to the spreading media reports, the state-run mining major Singareni Collieries Company Ltd (SCCL) is reeling under difficult cash crunch situation. The profit-making Singareni is literally facing a major bottleneck in the cash flows owing to internal adjustments in the form of fund diversion. For instance, the then reserve-rich backfilling fund account is now left with a mere Rs100 crore.

Despite doubling annual revenues and profits, the public-sector mining company Singareni has been suffering from cash crunch to run day-to-day operations. The backfilling fund, which rose to Rs10,000 crore, was diluted to bottom level thanks to the fund diversion, according to the local media reports. The TRS government is not responding to this cash crunch problem in the ongoing Assembly session.

Adding to this, Telangana Chief Minister Mr K Chandrashekhara Rao recently announced 28 per cent bonus to the Singareni employees. Last year, Singareni paid 27 per cent bonus. Bonus plus salaries and Dasara advance amount all together require about Rs1,200 crore cash at Singareni. The officials are under pressure on how to honour bonus and Dasara advance commitment. TS Transco and Genco owe Rs8,000 crore to Singareni. If these power utilities pay, then only Singareni will be able to honour the commitment in the first week of October.

According to the sources, Singareni has over Rs2,000 crore in fixed deposits. An analyst observed that all the fixed assets and reserve funds put together at Rs7,500 crore.

Singareni has 17 open casts mines (OCT) and needs huge funding support to close them. But, without closing the open cast mines, Sinagreni has taken approvals for OCT-1, OCT-2 and OCT-3. According to the Environment rules, 180 meters backfilling is required for 300 meters mining of open cast. After the extraction of coal, the open cast should be made a water reservoir. So, each open cast requires Rs250crore for backfilling works. Whether the cash-crunch hit-Singareni meets the Rs7,500-cr backfilling of open cast mines and making them water reservoirs is a big question.

Singareni recorded Rs25,828-crore revenues for 2018-19 as against Rs11,928 crore in 2013-14 fiscal. The SCCL made a profit of Rs1,766 crore during FY-19 as against Rs419 cr in FY14. Chief Minister KCR approved a 27 per cent profit share as a bonus to Singareni employees during 2018-19 fiscal.

Non-realisation of Rs9,500 crore is keeping the pressure on Singareni day-to-day operations. The dues from power generating companies alone are at Rs7.900 crore. Transco reportedly owes Rs5,000 crore to Singareni. And the dues from Genco are Rs2,800crore. Further, Rs600-crore dues from AP Genco are pending due to the rift between the two Telugu states. if Singareni is yet to receive dues more than Rs1,000 crore from NTPC and power generators in Maharashtra and Karnataka.

Singareni during the past five years paid Rs27,467 crore as taxes to the Telangana government and the Centre. Singareni turnover rose to Rs25,687 crore from Rs11,928 crore level five years ago.

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