Mercator in rough waters as Indonesian arm shuts

A coal mine on Indonesia?s Kalimantan Island run by a unit of Mumbai-listed Mercator Ltd has been shut since October 15 after the mining company?s local partners dragged the Indian firm to court over a dispute on shareholding, a report said.

Mercator is facing three court cases and three police cases in Indonesia, a development that could spoil its plans to sell the mine, which has been a cash cow for the group led by HK Mittal, thehindubusinessline.com reported on Saturday. From a purely ship-owning company, Mercator has diversified into coal, oil and gas, commodity transportation and dredging.

The mining company owes some US$27 million to ICICI Bank, of some $45 million borrowed to build the mine.

Earlier this year, Mercator decided to exit the coal mining business in Indonesia. It entered that country in November 2010 through an agreement with a local partner and first shipped coal in 2012.

The four-million-ton (mt) capacity mine has been producing 1.5 mt of coal a year and is a profitable venture.

Through a step-down subsidiary, Mercator held a 46.25 percent stake in the mine ? PT Karya Putra Borneo. Suhadi Zaini, an Indonesian citizen and a director of PT Indo Perkasa, held 45.61 percent and Kritipal Singh Raheja, the Managing Director of PT Indo Perkasa, owned a 7.5 percent stake.

The balance 0.64 percent was held by Ardiansyah Muchsin, a local businessman. (*)