The Kochi-based Cochin Minerals and Rutile Limited (CMRL) is in the eye of a political storm after an Income Tax Department report alleged that its managing director, Sasidharan Kartha, made illegal payments to politicians, police officers, media houses, trade unions and others to “ensure smooth running of business”.
The report also refers to “illegal payments” to the tune of Rs 1.72 crore allegedly made to Veena T, daughter of Chief Minister Pinarayi Vijayan, under the pretext of providing software solutions. It said this payment was illegal as Veena’s company, Exalogic Solutions Private Limited, had allegedly not provided any software service to CMRL as per evidence gathered during the search. The CPI(M) state secretariat denied any illegality in the CMRL’s dealings with Veena’s firm.
The CMRL case came up before the Interim Board for Settlement under the Central Board of Taxes after CMRL and Kartha moved a settlement application as a sequel to an Income Tax raid in 2019, which unearthed the alleged illegal handing over of money to various sources.
What is CMRL?
Established in 1989, CMRL, mainly an export-oriented unit, commenced commercial production in 1993. Mineral sand mined from the southern Kerala coast, containing ilmenite, is its raw material. It manufactures Synthetic Rutile, which is mainly used in the production of titanium sponge. Another major product is ferric chloride, which is deployed for desalination of seawater for drinking water, sewage treatment, manufacturing of iron compound, for treatment of effluent from textiles, paper mills, refineries and other industrial units. It is also used in the pharma industry.
Two other products are Ferrous Chloride, which is used for treatment of effluents in leather tanneries, textile mills, dying units and breweries; and Cemox, which is used in the manufacture of bricks and tiles to reduce the dependence on natural clay. Cemox is used as an additive in cement industries.
SN Sasidharan Kartha is the managing director of CMRL, which has its factory at the Edayar industrial belt in Kochi. His wife Jaya Kartha and son Saran Kartha are in the director board. Another promoter family is Nabeil Mathew Cheriyan and Jolly Cheriyan. With regard to the number of fully paid-up equity shares held, Kartha family has a clear edge over other promoters. Other promoters are the state government’s Kerala State Industrial Development Corporation, Sach Exports Pvt Limited, Empower India Capital Investment Private Limited and NRI businessman Mathew Cheriyan Munanical.
It’s ‘smooth running’
The I-T report mentioned undisclosed income of Rs 135 crore allegedly accrued by the firm between 2013-14 and 2019-20. Of this, Rs 95 crore was allegedly found to have been illegally paid to various persons and parties.CMRL chief financial officer Suresh Kumar was quoted in the report as saying that “payments were made to functionaries/members of various political parties, media houses, trade unions and police etc for smooth functioning of our business in view of the fact we obtain ilmenite which is mined by PSUs as our raw material… In order to overcome these threats and to obtain cooperation, we made a number of payments to members/functionaries, state police, and the media. These payments are made as demanded by them.’’
Mineral sand mining for ilmenite
Supply and transportation of its raw material, mineral sand, has been a major issue for CMRL. The firm is a leading beneficiary of mineral sand mining that has been taking place in the Southern Kerala coast, which is endowed with huge deposits of minerals such as Heavy Mineral Sands (Ilmenite, Rutile, Zircon, Monazite, Sillimanite).
In Kerala, mineral sand mining is confined to the public sector only. Mining is done by Chavara (Kollam) unit of Indian Rare Earths Limited (IREL), a PSU under the Department of Atomic Energy, and state government-run Kerala Minerals and Metals Limited (KMRL). IRELand KMRL have divided the coastal belt into various blocks, which have been apportioned between them for mining. IREL is supplying raw material for CMRL.
Protest over environmental degradation of the coastal belt
People of Alappad, in Kollam, have been protesting against mineral sand mining for the past five decades, since IREL began operations. Mining has led to massive sea erosion and loss of livelihood for fisherfolk. Recurring incidents of natural calamities have also led to bouts of protest against dredging and sea washing.
In recent years, the protest had spread to more coasts towards Alappuzha villages, which CMRL has been eyeing, provided the government opens mineral sand mining to the private sector. A study conducted by the Institute for Ocean Management in 2008 showed that the highest coastal erosion in Kerala was reported from Alappad and the adjacent Arattupuzha, Thrikkunnapuzha and Purakkad panchayats. In the meantime, illegal mineral sand mining has been going on along Alappuzha coast, mainly at Purakkad panchayat. The illegally mined mineral sand is being transported to cater to the raw material needs of companies in Tamil Nadu.
Political parties, trade unions put weight behind CMRL
CMRL had faced protests from affected coastal villages in Kollam against the movement of raw materials to its plant in Kochi. That apart, at Edayar industrial belt near Kochi, CMRL was one of the units blamed for contributing to the pollution of river Periyar. There had been occasions in the past when CMRL had to seek police protection for lifting raw materials. Environmental activists who had raised voice against CMRL with regard to river pollution had faced criminal cases.
However, all political parties and its leading faces have backed CMRL for its smooth operations over the years. In 2012, then CPI(M) state secretary Pinarayi Vijayan, then Congress state president Ramesh Chennithala and then BJP state president V Muraleedharan were part of a human chain held out in Edayar to protect the industries.
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CMRL and mineral sand mining in private sector
Any debate over opening up of mineral sand mining to the private sector has been linked to CMRL. In 2013, the Congress regime in Kerala had broached the idea of opening up the mineral sand mining for the private sector. A section of CPI(M) leaders also backed the move with the demand that CMRL be allowed to mine mineral sand.CITU and INTUC, the trade union wings of CPI(M) and Congress respectively, had even staged a march to the state secretariat in 2013 demanding that CMRL be allowed mineral sand mining. That march was then inaugurated by CPI(M) veteran V S Achuthanandan, allegedly under the influence of his loyalists from Kochi, the home town of CMRL.
However, both CPI(M) and Congress have been divided over granting a nod for private sector mineral mining, which has delayed a decision so far. The argument in favour of CMRL is that value addition of mineral sand was not possible in the public sector and hence the private sector should be roped in for mining.
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CMRL had claimed that denying permission to it was meant to help illegal mining on the Alappuzha coast.