Growth the buzzword at NRE Coke

CAPTAINSPEAK

, managing director of Gujarat NRE Coke Ltd (GNCL), has chalked out plans to more than double the capacity by setting up the a new metallurgical coke manufacturing plant in the state at Kandla.

The 41-year old MD, who holds 60 per cent equity in the company, has also embarked on a joint venture with Kalyani Steel to set up another plant at Dharwar in Karnataka.

Jagatramka spoke to Business Standard about the new plant at Kandla and future plans of the company.

The company has registered phenomenal growth in the past three years. What are the future plans of expansion?

Three years ago, our Jamnagar plant had a capacity of 100,000 metric tonne of coke. It has seen three fold increase and stands at 358,000 MT. Now with the Kandla plant, we should be in a position to double our capacity by December 2004.

How much investment will go into the capacity expansion? How will the funds be raised?

The company will invest a sum of Rs 55 crore on the new plant at Kandla, work for which has already begun. The new plant will become fully operational by December this year.

A sum of Rs 25 crore will be collected through non convertible debentures, the remaining sum will be raised through a mixture of internal accruals and a rights issue. In fact, in March, Care, the credit rating agency, has upgraded the ratings for our proposed Rs 25 crore value NCDs from A+ to AA-.

We constantly endeavor to evolve long term plans factoring in all possibilities. The financial burden that we have proposed to take in the form of fresh capital, will therefore, only go to strengthen our performances further. The high rating granted to our company's proposed NCDs by Care also bears testimony to the fact.

You have just completed a financial restructuring programme.

Yes, we just completed restructuring the entire financial portfolio of the company, retiring old, high cost debts and putting a cap on the out go in the form of financial charges. With these steps in place, Gujarat NRE Coke is now all set to infuse fresh capital with the aim to add to its capacity.

GNCL is the largest non-captive manufacturer of 'low ash' metallurgical coke in India. Who are your buyers and how does the new project at Kandla help?

Metallurgical coke is used mainly in the steel industry along with soda ash manufacturing and foundry units. Our second production facility situated near the port head in Kandla will offer GNCL an excellent location advantage to access imported Australian and South African Coking coal, the principal raw material.

On the other hand, by virtue of Kandla's excellent road-rail connectivity, the north Indian market will also be opened up to the company and will accord it with great cost saving options making it products even more attractive to the buyers.

What growth are you looking at in terms of sales turnover?

We observe a fiscal year from October to September. The company posted a turnover of Rs 140 crore in the past fiscal. Our aim is to more than double it and reach a turnover of Rs 350 crore by the end of September this year.

When will the Dharwar plant be functional?

GNCL has formed a subsidiary called Bharat NRE Coke Ltd for implementing the project, which will be a 324,000 MT capacity metallurgical coke plant. BNCL will hold 60 per cent share, while Kalyani Steel, our joint venture partner, will invest the remaining 40 per cent.