MIRA
INFORM REPORT
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Report Date : |
16.03.2007 |
IDENTIFICATION
DETAILS
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Name : |
GUJARAT
NRE COKE LIMITED |
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Registered Office : |
22, Camac Street, Block - C, 5th Floor, Kolkata - 700016, India |
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Country : |
India |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
29.01.2001 |
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Com. Reg. No.: |
21-40098 |
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CIN No.: [Company
Identification No.] |
L51909WB1986PLC040098 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CALM01769F |
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PAN No.: [Permanent
Account No.] |
AABCG6225H |
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Legal Form : |
A public
limited liability company. The company's shares are listed on the Stock
Exchange. |
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Line of Business : |
Subject
is engaged in the business of coal processing, manufactures low-ash
metallurgical coke (LAMC). LAMC mainly used in soda-ash plants, cast, iron
and brass foundries and the best furnaces of steel plants is largely imported
into India. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 20000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a
well-established and reputed company having fine track. Directors are
reported as experienced, respectable and having satisfactory means of their
own. Their trade relations are reported as fair. Business is active. Payments
are usually correct and as per commitments. The company can
be considered good for normal business dealings at usual trade terms and
conditions. |
LOCATIONS
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Registered Office : |
22, Camac Street, Block - C, 5th Floor, Kolkata - 700016, India |
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Tel. No.: |
91 - 33 - 22891471-75 |
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Fax No.: |
91 - 33 - 22891470 |
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E-Mail : |
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Website : |
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Corporate Office : |
73, New York
Tower, “A”, Thaltej, Gandhinagar Highway, Ahmedabad - 380054 |
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Tel. No.: |
91-79-26843438 /
26852068 |
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Fax No.: |
91-79-26843437 |
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E-Mail : |
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Factory 1 : |
Dharampur, Khambhalia, Jamnagar, Gujarat - 370140, India |
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Factory 2 : |
Lunva, Bhachau, Kutch, Gujarat – 370140, India |
DIRECTORS
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Name : |
Mr. Gulshan Lai Tandon |
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Designation : |
Chairman Emeritus |
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Name : |
Mr. Girdharilal Jagatramka |
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Designation : |
Chairman |
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Name : |
Mr. Arun Kumar Jagatramka |
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Designation : |
Vice Chairman & Managing Director |
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Name : |
Mr. Subodh Kumar Agarwal |
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Designation : |
Director |
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Name : |
Mr. Chinubhai R. Shah |
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Designation : |
Director |
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Name : |
Dr. Basudeb Sen |
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Designation : |
Director |
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Name : |
Dr. Mahendra Kumar Loyalka |
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Designation : |
Director |
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Name : |
Mr. Murari Sananguly |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr.
Sumit Kumar Khetan |
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Designation : |
President
and Company Secretary |
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Name : |
Mr.
Manish Lohia |
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Designation : |
Chief Financial Officer |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters &
Persons Acting in Concert |
4,62,36,490 |
46.58 % |
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Financial
Institutions, Banks, Mutual Funds, etc. |
43,05,939 |
4.34 % |
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FIIs ' |
58,12,657 |
5.85 % |
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Indian Public
(Including Private Corporate Bodies) |
4,12,06,453 |
41.51 % |
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NRIs |
8,34,629 |
0.84 % |
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Clearing Members |
8,72,648 |
0.88 % |
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Total |
9,92,68,816 |
100.00 % |
BUSINESS DETAILS
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Line of Business : |
Subject
is engaged in the business of coal processing, manufactures low-ash
metallurgical coke (LAMC). LAMC mainly used in soda-ash plants, cast, iron
and brass foundries and the best furnaces of steel plants is largely imported
into India. |
PRODUCTION STATUS
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Particulars |
Unit |
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Installed
Capacity |
Actual
Production |
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Low-Ash Metallurgical Coke |
M.T. |
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682000.000 |
583842.005 |
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Rolled & Alloy Steel Products |
M.T. |
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311000.00 |
3353.687 |
GENERAL
INFORMATION
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No. of Employees : |
600 |
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Bankers : |
v State
Bank of India v Bank
of Baroda v State
Bank of Saurashtra v Punjab
National Bank v Development
Credit Bank Limited v ING
Vysya Bank Limited v The
Hongkong and Shanghai Banking Corporation Limited v Yes
Bank Limited v
State Bank of Hyderabad |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
N. C.
Banerjee & Company Chartered
Accountants |
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Address : |
2, Ganesh Chandra Avenue, Room No. 9,1st Floor, Kolkata 700 013 |
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Memberships : |
Nil |
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Collaborators : |
Nil |
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Group Company : |
Gujarat
NRE Power Limited |
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Associates: |
Ø Madhur Coal
Mining Private Limited Ø Critical Mass
Multilink Private Limited Ø Gujarat NRE
Energy Resources Limited Ø Fast Capital
Securities Limited Ø Bulli Coke
Private Limited Ø Bellambi Coke
Private Limited Ø
Vartika Traders Private Limited |
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Subsidiaries |
Ø Gujarat NRE
Australia Pty Limited NRE No. 1 Colliery, Princess Highway, Cnr Bellambi Lane, Russell Vale
2517 NSW, Australia. Ø Gujarat NRE FCGL
Pty Limited NRE No. 1 Colliery, Princess Highway, Cnr Bellambi Lane, Russell Vale
2517 NSW, Australia. Ø Bharat NRE Coke
Limited 22, Camac Street, Block 'C, 5th Floor, Kolkata-700 016, India. |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
25,00,00,000 |
Equity Shares |
Rs. 10/- each |
Rs. 2500.000 Millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
|
9,92,68,816 |
Equity Shares |
Rs. 10/- each |
Rs. 992.688 millions |
|
20684205 |
Equity Shares |
Rs. 10/- each |
Rs. 206.842 Millions |
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Total |
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Rs. 1199.530 Millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2006 (18 Months) |
30.09.2004 (12 Months) |
30.09.2003 (12 Months) |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
1199.530 |
471.594 |
274.400 |
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2] Deposit against
Share Warrants |
101.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
3936.412 |
799.116 |
204.000 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
5236.942 |
1270.710 |
478.400 |
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LOAN FUNDS |
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1] Secured Loans |
2707.217 |
464.874 |
73.200 |
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2] Unsecured Loans |
0.000 |
56.116 |
0.000 |
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TOTAL BORROWING |
2707.217 |
520.990 |
73.200 |
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DEFERRED TAX LIABILITIES |
582.498 |
125.924 |
0.000 |
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Foreign Currency Convertible Bonds |
2399.650 |
0.000 |
0.000 |
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TOTAL |
10926.307 |
1917.624 |
551.600 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
3694.477 |
750.999 |
286.800 |
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Capital work-in-progress |
15.545 |
202.133 |
64.500 |
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INVESTMENT |
4947.508 |
66.556 |
0.000 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
1492.210
|
1130.175 |
344.200 |
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Sundry Debtors |
829.076
|
499.549 |
125.500 |
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Cash & Bank Balances |
482.107
|
622.423 |
109.000 |
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Other Current Assets |
0.000
|
0.000 |
0.000 |
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Loans & Advances |
1210.508
|
207.401 |
22.200 |
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Total Current Assets |
4013.901
|
2459.548 |
600.900 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
1172.758
|
1235.211 |
344.100 |
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Provisions |
631.877
|
326.961 |
57.300 |
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Total Current Liabilities |
1804.635
|
1562.172 |
401.400 |
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Net Current Assets |
2209.266
|
897.376 |
199.500 |
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MISCELLANEOUS EXPENSES |
59.511 |
0.560 |
0.800 |
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TOTAL |
10926.307 |
1917.624 |
551.600 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2006 (18 Months) |
30.09.2004 (12 Months) |
30.09.2003 (12 Months) |
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Sales Turnover [including other income] |
8382.937 |
3601.982 |
1224.200 |
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Profit/(Loss)
Before Tax |
3862.762 |
1282.889 |
181.600 |
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Provision for
Taxation |
742.843 |
375.115 |
14.900 |
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Profit/(Loss)
After Tax |
3119.919 |
907.774 |
166.700 |
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Export Value |
1199.218 |
334.712 |
NA |
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Import Value |
3318.345 |
1310.705 |
NA |
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Total Expenditure |
4087.671 |
1334.097 |
984.900 |
QUARTERLY /
SUMMARISED RESULTS
|
PARTICULARS |
30.06.2006 (1st
Quarter) |
30.09.2006 (2nd
Quarter) |
31.12.2006 (3rd
Quarter) |
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Sales Turnover |
647.600 |
948.700 |
1746.400 |
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Other Income |
16.600 |
75.600 |
44.000 |
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Total Income |
664.200 |
1024.300 |
1790.400 |
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Total Expenditure |
558.500 |
884.900 |
1577.700 |
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Operating Profit |
105.700 |
139.400 |
212.700 |
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Interest |
57.100 |
51.400 |
55.100 |
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Gross Profit |
48.600 |
88.000 |
157.600 |
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Depreciation |
46.300 |
51.100 |
53.800 |
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Tax |
0.400 |
4.500 |
11.700 |
|
Reported PAT |
(96.900) |
17.400 |
137.700 |
200606 Quarter 1 –
Expenditure Includes (Increase) / Decrease in Stock in Trade
Rs 102.20 million Purchases Rs 356.20 million Staff Cost Rs 10.20 million Other
Expenditure Rs 89.90 million Tax indicates Provision for Provision for Tax
(Incl. Fringe Benefit Tax) Rs 0.40 million Deferred Tax Rs 98.80 million EPS is
Basic Status of Investor Complaints for the quarter ended June 30, 2006
Complaints Pending at the beginning of the quarter 01 Complaints Received
during the quarter 69 Complaints disposed off during the quarter 70 Complaints
unresolved at the end of the quarter Nil 1. The above results have been
reviewed by the Audit Committee in its meeting held on July 29, 2006 and
approved by the Board of Directors in its meeting held on July 30, 2006. The
Statutory Auditors of the Company have also carried out the 'Limited Review' of
the above results. 2. Sales for the Quarter ended June 30, 2005 included Rs
322.60 million from export of coke as against NIL exports in the quarter ended
June 30, 2006. 3. The non-promoter shareholding has increased during the
quarter due to allotment of shares to the shareholders of erstwhile FCGL
Industries Limited on June 03, 2006 pursuant to scheme of amalgamation. 4.
During the quarter the company has issued 600 Zero Coup on unsecured FCCBs due
2011 of USD 100,000 each, aggregating to USD 60 million. The company has
utilised USD 22.69 million during the quarter for the specified purpose. 5.
During the quarter, the company's investment in its subsidiary Gujarat NRE
Australia Pty Limited has increased by an amount of Rs 216.60 million in the
form of equity, raising the company's shareholding to 94%. 6. Previous period
figures have been regrouped / rearranged wherever considered necessary. In
Segment Reporting as per AS-17, previous period figures are not applicable
since the company did not have multiple segments to report.
200609 Quarter 2 -
EPS is Basic & diluted Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 135 Complaints disposed off during the quarter 131 Complaints unresolved at the end of the quarter 04 (since resolved) 1. The above results have been reviewed by the Audit Committee in its meeting held on October 17, 2006 and approved by the Board of Directors in its meeting held on October 18, 2006. The Statutory Auditors of the Company have also carried out the 'Limited Review' of the above results. 2. 20,00,000 Equity Shares of Rs 10/- each have been issued against 20,00,000 Share Warrants @ Rs 75/- per share in the Board Meeting held on September 18, 2006. The proceeds thereof have been utilised for funding the long term working capital requirements of the company. Also 50,50,000 share warrants have expired on October 01, 2006 and consequently Rs 101.00 million received on application thereof, is being transferred to Capital Reserve. 3. Out of the proceeds of zero coupon FCCBs of Rs 2679.60 million issued in April 2006, Rs 631.20 million have remained unutilised till the end of September 2006. 4. The Accounting Standard AS-15 (Revised 2005) on 'Employee Benefits' issued by the Institute of Chartered Accountants of India which is applicable from April 01, 2006 has been complied with. 5. The Board of Directors at their meeting held on October 18, 2006, have allotted 12,19,53,021 equity shares of Rs 10 each as Bonus Shares in the ratio of 1:1 to the existing shareholders. The same shall be credited to the accounts of respective shareholders only after receipt of necessary approvals from Stock Exchanges and other relevant authorities. 6. Previous period figures have been regrouped / rearranged wherever considered necessary. In Segment Reporting as per AS-17, previous year's figures are not applicable since the company did not have multiple segments to report.
200612 Quarter 3
Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (5.90) million Purchases Rs 1296.90 million Staff Cost Rs 17.40 million Other Expenditure Rs 269.30 million Tax indicates Provision for Provision for Tax (Incl. Fringe Benefit Tax) Rs 11.70 million Deferred Tax Rs (45.60)million EPS is Basic & diluted Status of Investor Complaints for the quarter ended December 31, 2006 Complaints Pending at the beginning of the quarter 04 Complaints Received during the quarter 109 Complaints disposed off during the quarter 100 Complaints unresolved at the end of the quarter 13 (since resolved -12) 1. The above results have been reviewed by the Audit Committee in its meeting held on January 19, 2007 and approved by the Board of Directors in its meeting held on January 20, 2007. The Statutory Auditors of the Company have also carried out the 'Limited Review' of the above results. 2. During the current Quarter, the Company had export sales of Rs 302.00 million. 3. Out of the proceeds of zero coupon FCCBs of Rs 2679.60 million issued in April 2006, Rs 326.40 million have remained unutilised till the end of December 2006. 4. Previous period figures have been regrouped / rearranged wherever considered necessary; In Segment Reporting as per AS-17, previous year figures are not applicable since the company did not have multiple segments to report.
KEY RATIOS
|
PARTICULARS |
31.03.2006 (18 Months) |
30.09.2004 (12 Months) |
30.09.2003 (12 Months) |
|
Debt
Equity Ratio |
0.88 |
0.34 |
0.24 |
|
Long
Term Debt Equity Ratio |
0.90 |
0.33 |
0.18 |
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Current
Ratio |
1.53 |
1.45 |
1.45 |
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TURNOVER
RATIOS |
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Fixed
Assets |
1.54 |
4.49 |
4.09 |
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Inventory
|
2.82 |
3.87 |
4.65 |
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Debtors |
5.56 |
9.13 |
10.75 |
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Interest
Cover Ratio |
10.60 |
37.45 |
5.59 |
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Operating
Profit Margin (%) |
32.29 |
47.45 |
17.05 |
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Profit
Before Interest and Tax Margin (%) |
30.54 |
46.22 |
15.76 |
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Cash
Profit Margin (%) |
24.07 |
33.07 |
13.17 |
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Adjusted
Net Profit Margin (%) |
22.32 |
31.83 |
11.88 |
|
Return
on Capital Employed (%) |
18.83 |
112.57 |
44.06 |
|
Return on Net Worth (%) |
26.58 |
103.80 |
41.00 |
STOCK PRICES
|
Face Value |
Rs.10/- |
|
High |
Rs.34.95/- |
|
Low |
Rs.32.85/- |
LOCAL AGENCY
FURTHER INFORMATION
Fixed
Assets
Ø Land &
Buildings
Ø Plant &
Machineries
Ø Office Equipment
Ø Furniture &
Fixture
Ø Material Handling
Ø Equipments /
Vehicles
Ø Weighing Machine
Ø Electrical
Installations
Ø Wind Turbine
Generator
History
Gujarat NRE Coke, engaged in the business of coal
processing, manufactures low-ash metallurgical coke (LAMC). LAMC, mainly used
in soda-ash plants, cast iron and brass foundries and the blast furnaces of
steel plants, is largely imported into India.
It came out with a public issue in May.'94 to part-finance its low-ash
metallurgical coke-manufacturing project (inst cap: 13000.0 Millions tpa till
30 September, 2001) at Jamnagar, Gujarat. The delay of eight months in the
commencement of the project in Mar.'95 was attributed to the unprecedented
rains in Saurashtra and the plague epidemic that struck Gujarat.
The company meets its requirements of low-ash content coking coal (yield
is around 78-80%) through imports from Australia and New Zealand. The ash
content in coking coal in these countries is very low, ranging from 8-12% as
against the high ash content (22%) in India.
The company has expanded the installed capacity of Low Ash Metallurgical
Coke (LAMC) during the year 2003-04 by 258000 MT and with this expansion, the
total capacity has risen to 502000 MT.
The company has amalgamating Aparna Project Private Limited with itself
during August 2004 and according to the scheme of arrangement, Two Equity
Shares of Rs.10/- each of Gujarat NRE Coke have been issued for every Three
Equity Shares of Rs.10/- each held by the shareholders of Aparna Project
Private Limited
BUSINESS
Subject
manufacturers of low-ash metallurgical coke, is considering merger of group
company. Gujarat NRE Power Limited into itself after the current accounting
year, which will end on September 30, 2002.
At
present, the company holds 4% in Gujarat NRE Power. The company's promoters are
holding about 60% and the rest mostly by the shareholders of the company. The
company may carry out a corporate merger of these two companies by issuing
shares of the company to the shareholders of the other company
The
company has its manufacturing facility at Jamnagar in Gujarat and its total
capacity is 0.208 million tonnes per annum. Of this total capacity, Gujarat NRE
Power Limited owns about 78000 tonnes per annum.
A part
of the total manufacturing facility is owned by the Gujarat NRE Power Limited. Hence to integrate the existing
infrastructure the company can merge the two companies.
Financial Results/Highlights
The Company has changed its financial year from 'October-September' to
'April-March' by extending its current financial year comprising 18 months
ended 31.03.2006. Accordingly, the term 'period under review' mentioned in this
report should be construed as 18 months period starting from 01.10.2004 and
ending on 31.03.2006, unless otherwise specifically indicated or the context
provides otherwise.
Further, the financial figures of the period under review comprises of
the figures of erstwhile FCGL Industries Limited, which has been merged with
the Company as per the Order passed by the Hon'ble High Court at Calcutta dated
19.04.2006, with effect from the appointed date i.e. 01.10.2004. Hence, the
figures of the period under review may not be comparable with those of the
previous year.
Review of Operations
Net Sales grew from Rs. 2852.1 Millions in 2003-04 to Rs.
5537.4 Millions in period under review ending on 31.03.2006 and the bottom line
exhibited more than 129% increase from Rs. 907.8 Millions to Rs.3119.9 Millions
during the period under review on annualized basis. The export of Met Coke has
increased from 20901 MT to 102191 MT during the period under review after the
company became the only manufacturer exporter of met coke from India in the
previous year.
The improved performance was due to a prudently-timed capacity expansion,
consolidation of presence, consistent quality control and the reliability of
maintaining supply. Long-term agreements with raw material suppliers and
ship-owners not only ensured regular supplies leading to targeted production
but also helped de-risk the company from significant cost variations.
Bonus Issue
In attempt to continuously align its paid-up capital with its growing scale and
also distribute profits judiciously, the Company is prompting the issue of
bonus shares at periodic intervals. The company had issued bonus shares for the
3rd year in succession during the month of February 2005. Further,
the directors are pleased to recommend the fourth successive issue of bonus
shares in the ratio of one share for every one share held.
Issue of FCCB
The Company had issued Unsecured 1% Foreign Currency Convertible Bonds (FCCBs)
due 2010 amounting to USD 55 million (including USD 5 million under green-shoe
option) in March 2005. In April 2006, the Company again successfully issued
another tranche of Zero Coupon Unsecured FCCBs due 2011 amounting to USD 60
million (including USD 10 million under green-shoe option) for its various
expansion programmes in India as well as overseas.
Merger
During the period under review the Hon'ble High Court at Kolkata had
sanctioned the Scheme of Amalgamation of FCGL Industries Limited, an associate
company with the Company vide its Order dated 19.04.2006. FCGL Industries
Limited, was listed on BSE and CSE. The entire assets & liabilities of FCGL
Industries Limited has been taken over and merged with the Company with effect
from the appointed date i. e. 01.10.2004. Pursuant to the aforesaid Scheme, the
shareholders of FCGL Industries Limited were allotted 1 (one) equity share of
Rs. 10/- each fully paid-up in the capital of the Company for every 1 (one) equity
share of Rs. 10/- each fully paid-up held by them in the merged entity.
Expansion
The company has grown rapidly during the last few years: it has gone for
backward integration i.e. coal mining and has also diversified its business
activities from coke manufacturing to steel manufacturing and generation of
wind-power.
The Company had, through its subsidiaries, acquired two coal mines in
Australia. The first coal mine acquired by Gujarat NRE Australia Pty Limited
(GNAL) has already started coal production. Till date, three consignments
consisting of 0.14 million tonnes of coal have already reached India. These
coal are being washed at the company's newly installed Coal Washery in Gujarat
which has also started commercial operation. The operation of the second coal
mine acquired by another subsidiary company Gujarat NRE FCGL Pty Limited (GNFL)
is expected to start during the second half of 2007.
During the period the company installed 21 Wind Turbine Generators aggregating
to the installed capacity of 26.25 MW green power generation taking the total
capacity to 27.50 MW.
The Company's green field steel plant in Kutch, Gujarat has commenced the
commercial production of TMT bars and other rolled products.
The Company is in process of installing another Greenfield coke plant at
Dharwad, Karnataka to cater to the South Indian market and to take advantage of
the growing demand-supply gap of met coke in the region.
Further, for economic use of the waste heat emanating from the coke
plants and in tune with our eco-friendly attitude, the company is also taking
necessary steps for co-generation of power for captive consumption.
Subsidiaries
India's manufacturing industry is poised for spectacular growth during
the coming year(s). Correspondingly, India's coke demand is envisaged to grow
from 24.5 million tonnes to 60 million tonnes by 2011-12; while demand for
imported coking coal is expected to grow to 71 million tonnes during the same
period.
In view of this imminent growth in end product requirement, the Company
strengthened its access to raw material. The Company floated two Australian
subsidiary companies named as GNAL & GNFL to acquire prime grade hard
coking coal mines near Sydney in Australia (since renaming aforesaid collieries
as NRE No. 1 Colliery & NRE Avondale Colliery respectively).
This backward integration will secure the availability of quality hard coking
coal across the long-term and, in turn, help the Company to maintain
consistency in both quality and supply of Met-Coke to all its regular & new
customers.
Further, Zelos Resources NL has entered into a heads of agreement with the
Company for acquisition of the above Avondale Coal Project from the Company
against issue of shares & options in Zelos to the Company, pursuant to
which the Company's stake in Zelos will increase from the present 19% to 85%
Further, subject to the approval of shareholders of Zelos, this proposed
transaction if executed will result in enhancing shareholder's value for both
companies.
As required under Section 212 of the Companies Act, 1956, the Audited Accounts
of all the three subsidiary companies including Indian subsidiary Bharat NRE
Coke Limited alongwith the Report of Auditors and Directors thereon, are
attached to the audited accounts of the company.
Further, the Consolidated Financial Statements prepared by the Company in
accordance with Accounting Standard 21, which forms part of the Annual Report,
have taken into account the financial information of its subsidiaries.
Recognitions
The Company has been awarded the status of `Two Star Export House' by the
Ministry of Commerce & Industry of the Government of India.
Overview
Coke Industry
Coke, a derivative of coking coal, plays a significant role in the
metallurgical processes. Coke is the main source of heat and is also the
reducing agent required to facilitate the conversion of metallurgical ores into
metal in the smelting process.
World Coke Industry
In North America, the coke production has decreased by approximately 4.1 per
cent per annum for the last 10 years and the shortage of capacity is currently
estimated at more than 7.5 million tonnes per annum. This shortage is expected
to increase over the next few years due to further shutting down of outdated
capacity.
In Europe, coke capacity decreased from 62.8 MMTPA in 1999 to a recent low of
52.5 MMTPA at the end of 2002; and in North America from 26.0 MMTPA to 22.4
MMTPA over the same period. Although some of this reduction was due to the
closure of associated blast furnace capacity, a major part was merchant
capacity supplying to the foundry and other non-steel markets.
China is the world's leading producer of coke. It produced approximately 209 MMT in 2004 almost 50% of the world coke production of 424 MMT. Over the last five years the rapid infrastructure development in China has turned the country into a steel importer as opposed to its traditional status of being a steel exporter. The steel industry in China accounts for nearly 70% of the total demand for coke. Consequently, coke being produced in the country is being consumed internally creating a major imbalance in the worldwide coke trade. With the growth of the steel industry, there has been a significant demand for coke in China.
In 2004, China supplied 14.928 MMT of coke, the highest level of exports since 2000 yet the market was still tight, while the other exporters together supplied 16.63 MMT. In 2004, world coke production increased by a CAGR of only 2% over the past decade. This succinctly shows how undersupplied the market for coke has become.
Domestic Coke Industry
In India, coke is manufactured by a number of different producers
primarily for their captive consumption. The Indian coke industry is dominated
by the integrated steel plants, which possess captive coking facilities. Coke
produced by these units is a blend of imported coal and indigenous, varieties.
As a result, such coke quality differs with each producer and cannot be sold in
the open market in large quantities. Thus, overall there is a shortage of coke
capacity in India, which is currently being met through imports. India is
expected to remain dependent on import of coke. It is estimated that the
availability of coke in India from various units will be around 21 MMT during
2006-07 with all India demand for coke for the same year being somewhere around
24.5 MMT leading to a demand supply gap of 3.5 million tonnes which could
increase to 40 million tonnes by 2011-12 if further domestic coke capacity is
not set up during this period. The increasing domestic coke production will
however remain dependent on availability of imported coking coal since domestic
coking coal which is of inferior quality having higher ash as would be clear
from the following table.
(Million tonnes)
|
|
2004-05 |
2006-07
|
2011-12 |
|
Indian coke production |
18 |
21 |
60 |
|
Coking coal required |
25 |
29 |
80 |
|
Indian coking coal |
8 |
8 |
9 |
|
Net import demand |
17 |
21 |
71 |
Steel Industry
China has been the sole savior of global steel industry in the recent past.
Between 1996 and 2002, the apparent consumption of finished steel in China
doubled from 97 Million tonnes to 211 Million tonnes, registering a CAGR of
13.8%. Since 1999 the average growth rate for increase in steel demand has been
17.3%, with the growth rate crossing 20% from the year 2000 onwards. Thus, in
spite of an increasing base, there has been no decline in the growth rate. In
contrast, the global steel, demand increased at a CAGR of 3.8% (including
China) and at a CAGR of 1.4% (excluding China). The strong influence of Chinese
demand growth on the global steel industry will continue over the next five
years and the country will continue to be the most important driver of the
industry. In a global steel industry fraught with oversupply, Chinese imports
have played a major role in determining its financial health.
The Indian Steel Industry continued its good performance during the year
2005-06 resulting in most of the major steel companies surpassing their targets
in terms of production & sales. Though the steel prices dipped sharply
during the year, the performance was good and there has been a sharp recovery
in sales realization & demand. On the back of a stronger GDP, demand for
steel is expected to remain positive in near future.
Opportunities and Threats
Coke prices have slumped in the second half of 2005-06, have now again on a
rising spree at the onset of the current fiscal. Due to volatile coke prices,
which are predominantly controlled by China, export of coke was the natural
outcome and the Company was benefited out of the said opportunity because of
its size and being the only manufacturer-exporter from India. All this while,
coke exports from China have remained more or less stable for last few years
but prices have been fluctuating wildly creating panic on both ends of the
spectrum. However, blast furnaces would continue to be the mainstay of steel
making and this would also mean rising demand for higher quality of coking
coal. China is a net importer of coking coal now and so is India. The
forthcoming Olympics in China in 2008 have fueled major construction
activities, resulting in a significant demand for steel and concomitant
metallurgical coke. The steel industry in India has also an ever rising demand
for good quality of imported coking coal.
The Company is the largest non-captive manufacturer of LAMC in India.
LAMC is a vital raw material for the steel industry, soda ash plant, zinc
smelters and foundries. The Company is a multinational organization with
presence in India and Australia. Its core business activity is the production
of LAMC which is sold in the Indian market and exported to various other parts
of the world.
The Company has also made its foray into the steel business of manufacturing
TMT bars. The manufacturing facility of GNCL is situated in the state of
Gujarat, being an industrialized state, there is a substantial scope for
infrastructure development, resulting in a latent demand for such
products.
Company's Performance
The total income of the company increased from Rs.2860 Millions in the previous
year to Rs.8020 Millions during the 18 months period ended on 31.03.2006, an
increase of 87% (annualised). The net profit increased from Rs. 910 Millions to
Rs. 3120 Millions, chalking an impressive growth of 129%, annualised, while the
book value of the equity shares of Rs. 10 each increased from Rs.26.93 to
Rs.43.16, a growth of 60%. The earnings per share (EPS) of the company stood at
Rs.29.76 (up from Rs. 26.61 in the previous year).
In continuation of the Company's long-term strategy and thrust to enhance
competitiveness so as to enable achieving global leadership in chosen areas of
business, steps are underway to reduce operational cost, having control over
key inputs to insulate from volatility of availability, prices and quality,
enhancing value creation through satisfying customers needs, quality, greater
geographical presence and prompt delivery.
Coke Operations
During the period under review, coke division accounted for 99% of the total
turnover of the Company. It achieved a turnover of Rs.5492.8 Millions during
the period under review, as against Rs. 2852.1 Millions in the previous year,
resulting in an increase of 28% on an annualized basis. The export turnover has
been at Rs. 1153.9 Millions against Rs. 334.7 Millions in the previous year, a
growth of 130% on an annualized basis. Lower cost of procurement of
raw-materials through long-term contracts helped the Company to achieve better
margins. The significant increase in production by 54% (annualized) from 583842
MT in the period under review against 252344 MT in the previous year was
possible due to increased capacity backed by strong demand from the user
industry.
Outlook
During the period under review, the Company had acquired coking coal mines in
Australia through its subsidiaries to ensure a steady and quality supply of
coking coal. The improved results ale expected in the coming years.
Steel Operations
In December, 2005, GNCL has commissioned a mini steel plant for manufacture of
Billets/ Ingots, TMT bars and other rolled products with a capacity of 0.311
million MTPA. The Billet plant & Rolling Mills of the Company has commenced
production during the period under review. The steel plant is enjoying various
fiscal benefits like sales tax & excise duty exemptions etc.
The total power requirement of the mini steel plant is around 25 MW. The
company has installed 20 Wind Turbine Generators with an installed capacity of
25 MW from which approximately 7 MW of power if expected to be generated. For
the balance requirement, the Company is in the process of setting up a 20 MW
co-generation power plant, through waste-heat recovery from coke ovens. As
such, the Company will be able to achieve significant cost savings in power
costs.
This division achieved a turnover of Rs. 52 Millions during the period under
review.
Outlook
The raw materials for the above product are MS Scrap and Sponge Iron. Both
these are available in plenty without any difficulty. In any other case,
company's steel unit is very close to Kandla Port which is renowned for MS
Scrap import from international markets. The Company foresees better
performance from this division in the coming years.
Risks and Concerns
Fortunes of the coke industry are mainly associated with that of the steel
industry being the largest consumer of coke. However, the company has got a
diversify portfolio of customers including foundries, soda ash plant, copper
& zinc smelters, cement plants, ferro alloy producers besides steel
industry. As such while the company gets the benefit of uptrend in steel
industry, it has downside protection due to its diversified customer base and
the market dominance enjoyed by virtue, of its size. Apart from the above,
being a corporate business entity the Company also faces different risks. A
detailed report on the different types of risks and concerns for the Company
along with its mitigation measures taken by the Company has been given in the
discussion on Risk Management forming part of this annual report.
Financial Discussion
The Company is enjoying short-term credit rating of 'PR1+' (PR One plus, the
highest rating) indicating strong capacity for timely payment and carry lowest
credit risk and long-term rating of 'AA-' (double A minus) indicating high
safety for timely servicing and carry very low risk, both from Credit Analysis
and Research Limited (CARE). The same are due for review after publication of
annual results.
The Company believes that its investments in the subsidiaries are strategic,
long-term in nature and well integrated with the main business of the
Company.
The Company continued to take all reasonable steps for further reduction of
cost of borrowings. The Company has made all the payments to the banks and
institutions within the respective due dates and no delay have.
The Debt Equity ratio of the company stood at 1.01 as on 31.03.2006.
Subsidiaries & Other Strategic Investments
During the 18 months period ended 31.03.2006 the company invested Rs.1632.3
Millions. Besides investments in its subsidiaries namely Bharat NRE Coke
Limited (BNCL), Gujarat NRE Australia Pty Limited (GNAL) and Gujarat NRE FCGL
Pty Limited (GNFL), GNCL has picked up strategic stakes in various companies
and invested in Australia. These investments are mainly in companies with
mining & exploration prospective.
Gujarat NRE Australia Pty Limited, has already started commercial production
from its mine in September 2005 and the first ROM coal shipment of 41023 MT to
GNCL was received in India on 10.01.2006. Thereafter two more shipments have
arrived from Australia to India during the month of March & April,
2006.
FCGL Industries Limited, an associate of the Company has been merged with the
Company during the period under review (appointed date 01.10.2004) pursuant to
the Scheme of Amalgamation, approved by the Hon'ble High Court of Calcutta vide
its Order dated 19.04.2006.
Press Release
Gujarat
NRE Coke Limited successfully completes the USD 50 million Foreign Currency
Convertible Bonds issue
28th March 2006
Gujarat NRE Coke Limited (“GNC”)
announces that the terms for its USD 50 million unsubordinated unsecured
foreign currency convertible bonds due 2011 (the “Bonds”) have been fixed as
follows:
Ø
Initial
conversion price has been set to INR 125 per share, which represents a 24.1927%
premium over the BSE closing price of INR 100.65 on 27.03.2006
Ø
The
yield to maturity has been set at 6.75% semi-annually
Ø
The
bonds will be redeemed at 139.36% of par on or about 12 April 2011 (5 years and
1 day after closing price)
Due to strong
investor demand, the over-allotment option of US$ 10 million has been fully
exercised, increasing the total issue amount to US$ 60 million.
Application
will be made for the Bonds to be listed on the Euro MTF Stock Exchange of
Luxembourg.
KBC
Financial Products UK Limited and Silverdale Services Limited are Joint-Lead
Managers for the offering while UTI Bank Limitedis the Indian Financial Advisor
to the issue.
Gujarat
NRE Coke Moots 4th Consecutive Bonus
Kolkata,
June 4th 2006. The Board of Directors of Gujarat NRE Coke Limited
today created corporate history when they recommended, subject to the approval
of shareholders at the Annual General Meeting on 03.07.2006, a 4th
Consecutive bonus issue in the ratio of 1 : 1.The Board also recommended a final
dividend of 5 %, which together with the interim dividend of 45 % paid earlier,
makes the dividend paid during the 18 months period ended 31.03.2006, 50 %
(last year 40 %). The total dividend payments has gone up from Rs. 168.900
Millions in the previous year to Rs. 449.600 Millions in the current period.
The total
income of the company increased from Rs. 2860 millions in the previous year to
Rs. 8020 millions during the 18 month period ended on 31.03.2006, an increase
of 87% (annualised). The Net Profit increased from Rs. 910 millions to Rs. 3120
millions, chalking an impressive growth of 193 % annualised, while the Book
value of the Equity Shares of Rs. 10/- each increased from Rs. 29.93 to Rs.
42.23, a growth of 57 %. The Earnings Per Shares of the company stood at Rs.
27.02 (up from Rs. 11.17 in the previous year).
The Board
also approved the allotment of shares to the erstwhile shareholders of FCGL
Industries as per the Scheme of Amalgamation approved by the Hon’ble High Court
of Calcutta vide its Order dated 19.04.2006.
“We are
happy” said Sri Arun Kumar Jagatramka, vice Chairman and Managing Director of
the company “in having maintained the bonus and increasing the dividend form
what was paid out last year.” The impressive figures are even more commendable
when seen in the backdrop of the dark clouds that loomed over the industry
during a good part of the period under consideration, with falling global
prices and demand on a downward spiral.
“The
steps that we have taken in the past have all contributed to the good results.
Our moves towards consolidation, towards backwards integration into mine
ownership in Australia, there by giving us not only a hedge against price
fluctuations but also ensuring a free
flow of raw materials.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.17 |
|
UK Pound |
1 |
Rs.85.58 |
|
Euro |
1 |
Rs.58.67 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
6 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
62 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|