Coal India Rallies But Questions Remain

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[<p>Coal India rose as much as 3 per cent, after its board agreed for the state-run company to sign a new fuel supply agreement with power producers that contained an average penalty of just 0.01 per cent for shortfalls in supplies.<br><br>The clause contained in the new FSA is well below the current penalties of 10-40 per cent, according to J.P. Morgan.<br><br>However, the near-term boost is unlikely to be sustained, J.P. Morgan argued, as its analysts say the more pressing issue is how Coal India can meet the government requirement that 80 per cent of its supply be provided to power providers.<br><br>Those long-term supplies, which would be sold at lower prices than could be fetched in private markets, is at the heart of the tussle between U.K. hedge fund The Children's Investment Fund and Coal India's directors.<br><br>J.P. Morgan maintained its "Underweight" call on the stock.<br><br><br>(Reuters)</p>