Key Points
Metal and mining companies like Tata Steel and JSW Steel could face significant increase in their operating costs if state governments impose additional mining taxes which were recently made applicable retrospectively by the Supreme Court...
Furthermore, given limited headroom in passing on the potential increase in operating costs, metal and mining companies stand to face a higher impact from the ruling in comparison to power, cement companies...
Tata Steel's average EBITDA for FY21-FY24 is expected to be lower by around 9 per cent and its EBITDA leverage to be higher by around 0.3x, if it were to treat the respective years tax imposed by Odisha state as operating cost, instead of additional contingent liability...
Industry experts have warned that the Supreme Court's ruling on mining royalties could deliver a substantial blow to the Indian mining sector, with potential financial repercussions amounting to Rs 1.5-2 lakh crore in arrears dating back to April 2005..
"Now this order of 14th August mandating collecting dues retrospectively with effect from 1st April, 2005 will give further jolt to the Indian mining industry as arrears may work out to the tune of more than Rs 1.5 to Rs 2 lakh crore and the mines in the states like Odisha and Jharkhand would be most affected," Bhatia added...
