Kolkata July 28th 2007. The Board of Directors of Gujarat NRE Coke took note of the quarterly results of the company for the quarter ended June 30th 2007 in Kolkata today. The posted results have seen a marked improvement in the performance of the company, which is currently riding an upward spiral in coke prices, leading to improved realisations.
This has found reflection in the Net Sales / Income from operations which has gone up to Rs 148.89 crores, up from Rs 64.76 crores in the quarter ended June 2006. The overall growth in Income has translated to an almost 6 times rise in the Profit Before Interest, Depreciation and Tax (PBIDT) to Rs 62.68 crores from Rs 10.57 crores. The bottomline? Profit before Tax up 218 times to Rs 50.21 crores (Rs 0.23 crores in June 2006). While the Profit After Tax (PAT) has gone up to Rs 42.82 crores as against a loss of Rs 9.69 crores last year. It is pertinent to note here that these profit figures do not include the upside on various investments in Australia, which has today grown manifold over their book value. The Board also recommended a final dividend of 15 percent subject to the approval of the shareholders in the Annual General Meeting.
The all-round growth and improvement in the performance of the company has also been made possible by a series of consolidation measures taken by the company. A cap on interest outflow, proper logistical systems, and an overall curtailing of expenditure have all contributed towards strengthening the bottom line. It is also a fact that the company has also benefited from the hardening of freight rates in the spot market as it had long term contracts in place. Congestion in Australian ports also helped streamline operations as the company ships its raw coal from the most un-congested port of Kembla.
"We are happy with the results" said Sri. Arun Kumar Jagatramka, Vice Chairman and Managing Director " I'd rather put it that we are happy to be on course to greater glories." And there is reason to be optimistic. Import demand for good quality Coking coal in India alone is expected to surge to 75 million tonnes in 2011-12 (up from 21 million tonnes in 2004-05). With China imposing an export tax thereby discouraging wanton export of Coke from the country, globally the prices are expected to continue their northward journey. (the per MT price of good quality (12-12.5% ash) metallurgical coke, (fob China), which was US$ 150 in June 2006, is currently ruling at US$ 260) . Naturally, as India's largest independent producer of Low ash Metallurgical Coke (LAMC), Gujarat NRE Coke, is readying itself for its place in the sun.
NRE’s good fortune is based on firm facts. Globally metallurgical coal is a commodity that is scarce today, with spot prices shooting through the roof. Freight rates have also followed suit taking the landed cost in India to above US$ 170, as opposed to NRE sourcing the same at a composite average cost of US $ 100 / MT, because of its supply security and long term freight contracts.
There are other compelling reasons for the company to be happy too. Ranked third by the Business World, among the best mid sized companies in the country recently, the growth path that the company has charted for itself is simply fantastic. The only Indian company to own and operate mines is Australia, foray into oil and gas prospecting, investment in resource plays down under - Gujarat NRE is not only quietly strengthening its base and presence in Australia, but is also transforming itself from being a single commodity entity to a resource company targeting to produce more than 6 million tones of hard Coking coal annually from 2012 making it the fifth largest Coking coal producer in Australia.
The days ahead will also see this trend being strengthened in the days to come as certain measures will bear fruit in the near future. The capacity expansion programmes currently being undertaken include a coke battery of 0.25 MTPA at Dharwad and a 0.75 MTPA coal washery being set up in Bhachau. Three waste heat recovery plants, with a combined installed capacity capable of generating of 45 MW of power using the waste heat emanating from chimneys are similarly expected to be set up over the next three years). Railway Sidings and a captive jetty which too are under construction, when put into use will further add logistical muscles. Four new bulk carriers on a long term time charter with the option of acquiring the same are now being built in Japanese shipyards which will be progressively put into service by the company from 2010 onwards thereby giving the company a significant control over its freight bill. |