GMDC to split stock to increase liquidity

RIL-GMDC JV for lignite gassification may get $500 mn.

Gujarat Mineral Development Corporation is planning to split its stocks. The board of the state PSU, which met on Monday has cleared the proposal. The proposal would be further placed before the investors for their approval.

C J Jose, Managing Director, GMDC told reporters here that the idea behind splitting the shares into two was to increase the trading volumes in GMDC shares.

The Gujarat government has a 74 per cent stake while the remaining 26 per cent is with the public and mutual funds.

According to Jose, much of the floating stake "" almost 17-18 per cent - is with mutual funds leaving barely around 7 per cent to 8 per cent stock with the public.

Meanwhile, the GMDC is also gearing up for its lignite gasification project jointly envisaged with Reliance Industries Ltd. Jose said that an overseas company, with interests in lignite gassification project, has expressed interest in financing upto $500 million for the pilot lignite gasification project.

The RIL-GMDC joint venture is planing 600 million tonnes of lignite gasification project devided into three phases each with 200 million tonnes capacity.

Jose said a potential lignite mine block has been identified in south Gujarat for the pilot phase which will be mined below depth of 150 metres. RIL-GMDC joint venture would explore potential lignite blocks across the country for gasification project.

GMDC also plans to enhance its focus on power sector which has just started giving fruits to the company.

The power generation from two lignite based units of the company located in Kutch district of the state helped company pushing its net profit by almost 92 percent during the last quarter ended on 31 March over the corresponding period last year.

GMDC has been awarded coal mines in Chattisgadh state where it has planned 1750 MW pit-head power project with its partner KSK. GMDC has offered 1000 MW power from its Chattisgadh based proposed pit-head coal based power project at Rs 2.20 per unit at bus bar for 30 years to Gujarat, which Jose said is the lowest rate so far offered to the state electricity board.

The company plans to add 1000 MW more to its coal based power project as its hoping to get lease rights for some more mines award of which is expected to be announced soon, said Jose.

The central government is expected to announce mining rights for 10 more mines where coal would be used predominantly for the power generation. A similar announcement for 15 other mines where coal could be used for merchant sale is also in the offing said Jose.

GMDC hopes to get mining rights for atleast two mines from the total of 25 in the offing. Within Gujarat, GMDC plans to increase its focus on lignite based power project. Jose said GMDC would have 500 MW capacity lignite based power project in Bhavnagar.

GMDC also plans to get into cement manufacturing activity with 2.4 million tonnes capacity in joint venture with JP Cement and will develop a small port facility to export cement in Kucth district.