Wednesday, August 7, 2013

Will ex-IAS Narsing Rao succeed in showing Singareni magic in Coal India?

DURING the last few days, the world’s largest coal producing company, Coal India Limited, faced some bad press, and also the wrath of the Dalal Street. After all, its first quarter net profit witnessed a sharp fall by 16.51 per cent, much below the Street’s expectations, forcing the stock to test a 52-week low at Rs 248 on the Bombay Stock Exchange though it had partially recovered during later part of Monday. Coal India chairman S Narsing Rao, a 1986 batch IAS officer who had resigned from the service to get himself absorbed into the company last year, hopped over from…
one news channel to another to explain his part of the story: how low realisation from e-auction led to the disappointing results. But the question here is whether it’s a one-off instance of failure for Rao and his team, or does it merit opening up the same old debate of specialist versus generalist IAS in terms of managing large government companies and technical departments. Another test for Rao and his men in coming days will be to tackle trade unionism which has already forced the government cut down its ambitious target of 10 percent stake sell of Coal India to 5 percent, something which is also being opposed tooth and nail by union leaders.
To put it in perspective how big Coal India is, here are a few quick stats. It is the sixth largest Indian company by market capitalisation (about Rs 1.6 lakh crore) after TCS, Reliance, ITC, ONGC and Infosys, as on Monday. Its consolidated revenue in FY 2013 was Rs 88,281 crore, and profit after tax was Rs 17,356 crore. It employs about 3.7 lakh people, more than any other department except the Indian railways. And total cash on Coal India’s books as of now is about Rs 62,000 crore.
When Rao was picked up to lead such a huge corporation last year, his IAS tag was not enough. In fact, the selection panel gave its verdict in favour of this Andhra Pradesh cadre IAS overlooking some of his peers in the same service, as Rao was instrumental in turning around Andhra-based mining company, Singareni Collieries Company Limited (SCCL) in which he was the chairman for six years. He took the company up from a production of 36 million tonnes in 2006 to 53 million tonnes in 2011-12. And the company went into a higher growth trajectory of 9%-10% from that of 2% to 3%. That’s not all. Many showered praise on Rao when Singareni witnessed the first ever strike-free year in 2007-08.
Couple of months after he had joined Coal India, he took the career gamble of resigning from the IAS to show his seriousness towards the new company. He could have exercised the other available option of remaining as Coal India CEO on a deputation basis and later shift to the government as an IAS.
All these facts and figures could be in Rao’s favour. But the question that is bound to haunt this former IAS, at least till the next quarter results, is whether he could show his Singareni magic in Coal India too. Analysts in the Street and the Corridor will give him one more chance, for sure.

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