Coal block auctions a win-win for industry and government: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Director, Altamount Capital Management, shares his views on the markets.

ET Now: The market has been talking about that big mop-up from coal block auctions and that would be a saving grace for the government. What is the expectation on how the market would take to what may come out in the final fiscal math that the government produces at the end of the week?

Prakash Diwan: It is nothing short of a very favourable shot in the arm for the government where certainly there is lot of money coming in and the best part is, it is also involving a lot of money coming to some of the poorer states which would do very well with some of these funds. That means, once the math is over as the entire auction process is over, you would probably see the government actually getting completely de-stress in terms of lot of non-planned expenditure that would have actually come the way to the states.

These states would see a little bit of spending on capex which was not expected at all by most quarters of the market watchers and that means there could be a positive trickledown effect from this in the next few quarters or at least in the next year or so. So it definitely has been a pleasant surprise for the government, given the kind of enthusiasm that those companies have looked at even with depressed coal prices internationally. The kind of pricing that we have seen is definitely higher and of course taking into account the total landed cost of coal in Indian ports. We have seen companies look at a 10-year view and that is where they have kind of priced in a little bit of a higher pricing as well. So all in all it has been a win-win both for the industrial constitutes as well as for the government.