Sesa Goa hits 52-week low on a likely mining ban in Chitradurga, Tumkur

Mon,Aug 22, 2011

Sesa Goa slipped 4.85% at Rs. 211.75 at 11:03 IST on BSE on reports a panel appointed by the Supreme Court has recommended a ban on mining in iron ore-rich areas of Tumkur and Chitradurga in Karnataka.

Meanwhile, the BSE Sensex was down 31.10 points, or 0.19%, to 16,105.82.

On BSE, 2.59 lakh shares were traded in the counter as against an average daily volume of 4.08 lakh shares in the past one quarter.

The stock hit a low of Rs. 209.60 so far during the day, which is also a 52-week low for the counter. The stock hit a high of Rs. 215 so far during the day. The stock had hit a 52-week high of Rs. 383.50 on 15 October 2010.

The stock had underperformed the market over the past one month until 19 August 2011, sliding 23.29% compared with the Sensex's 13.47% fall. The scrip had also underperformed the market in past one quarter, tumbling 24.81% as against 11.02% decline in the Sensex.

India's largest private sector iron ore exporter has an equity capital of Rs. 86.91 crore. Face value per share is Re 1.

According to reports, the Supreme Court's environment panel, Central Empowered Committee (CEC), on Friday, 19 August 2011, concurred with the Karnataka Lokayukta to report rampant illegal iron ore mining in Chitradurga and Tumkur districts and recommended a complete ban on private mining.

Sesa Goa has a mine is Chitradurga. Earlier this month, Sesa Goa's managing director, PK Mukherjee was quoted by the media as saying that the company is targeting six million tonne per annum (MTPA) of iron ore production from Karnataka in the current year.

Submitting the CEC's report to a bench of Chief Justice S H Kapadia and Justices Aftab Alam and Swatanter Kumar, adviser A D N Rao reportedly said the adverse impact on environment in Chitradurga and Tumkur districts was identical to the one witnessed in Bellary and advocated controlled mining as had been ordered by the apex court in Bellary.

On 29 July 2011, the apex Court had suspended all mining activities in Bellary district of Karnataka, observing that extraction of iron ore would not be allowed at the cost of environment degradation.

Reports suggest that the court has issued notice to the Karnataka government and sought its response within a week to the CEC's recommendation that mining activity be completely banned in Chitradurga and Tumkur districts before putting in place an interim arrangement on the lines of the one in Bellary district, where mining is done by public sector undertakings meant to meet the requirement of the domestic steel industry.

Sesa Goa's consolidated net profit slumped 35.4% to Rs. 840.59 crore on 12.5% fall in net sales to Rs. 2094.74 crore in Q1 June 2011 over Q1 June 2010.

Sesa Goa is India's largest producer and exporter of iron ore in the private sector and is on course to be in the league of top four iron ore producing companies in the world. Apart from iron ore it also produces pig iron and metallurgical coke.