Vedanta company fined ₹1,255 crore
India’s leading mining company Vedanta Limited has suffered a major setback. In fact, the Odisha government has demanded a huge amount of more than Rs 1,255 crore from Vedanta’s subsidiary company ‘ESL Steel Limited’. This entire matter is related to alleged reduction in mining production and violation of government rules, which has created a stir in the market.
Why did the notice worth thousands of crores come?
This whole controversy has started from Koira Circle of Keonjhar district of Odisha. The office of the Deputy Director of Mines has sent two separate demand notices to ESL Steel. In these notices, a total of ₹ 12,55,37,61,591 (approximately Rs 1,255 crore) has been asked to be deposited.
The government alleges that the company did not do as much work in its mining leases as it should have done as per the agreement. This matter comes under Rule 12(A) of Minerals Concession Rules, 2016. To understand in simple language, when the government allots a mine to a company, there is a condition that the company will have to extract and dispatch at least a certain amount of mineral every year. The government says that ESL Steel has failed to meet this target.
Which mines are in trouble?
This dispute is mainly related to the mining lease of two mines of ESL Steel, BICO and Feegrade. ‘Mine Development and Production Agreement’ (MDPA) was signed between the company and the government on 15 November 2021. According to the government notice, the company could not achieve the targets set for production and dispatch (transportation) in the fourth year of operation of the mines.
According to the rules, if a company mines less than the prescribed quantity, then it has to pay compensation or fixed fee to the government in exchange for that shortfall. Citing this rule, the Odisha government has made this huge demand.
The company said ‘we will not bow down, we will fight’
After the demand for such a huge amount came to the fore, Vedanta Group company has also presented its stand strongly. ESL Steel has made it clear that they do not agree with this calculation of the government. The company believes that the grounds on which this notice has been sent and the manner in which the amount has been calculated are not legally and factually correct.
In the information given to the exchange, the company said that it is reviewing this demand notice in depth. ESL Steel will not remain silent, but will take all necessary legal steps in its defence. This includes procedures like getting the court to put a ‘stay’ on this demand and getting these notices completely quashed. The company is confident that their side will prove strong in the legal battle. Let us tell you that in Friday’s trading session, the shares of Vedanta Limited closed at ₹ 681.05 with a rise of 0.78%.