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Gujarat NRE Coke Ltd.

BSE: 512579 Sector: Metals & Mining
NSE: GUJNRECOKE ISIN Code: INE110D01013
BSE LIVE 15:58 | 15 Dec 1.62 0.07
(4.52%)
OPEN

1.59

HIGH

1.62

LOW

1.48

NSE 15:58 | 15 Dec 1.60 0.05
(3.23%)
OPEN

1.55

HIGH

1.60

LOW

1.45

OPEN 1.59
PREVIOUS CLOSE 1.55
VOLUME 248074
52-Week high 3.38
52-Week low 1.36
P/E
Mkt Cap.(Rs cr) 267
Buy Price 0.00
Buy Qty 0.00
Sell Price 1.62
Sell Qty 19798.00
OPEN 1.59
CLOSE 1.55
VOLUME 248074
52-Week high 3.38
52-Week low 1.36
P/E
Mkt Cap.(Rs cr) 267
Buy Price 0.00
Buy Qty 0.00
Sell Price 1.62
Sell Qty 19798.00

Gujarat NRE Coke Ltd. (GUJNRECOKE) - Chairman Speech

Company chairman speech

GUJARAT NRE COKE LIMITED ANNUAL REPORT 2008-2009 CHAIRMAN'S REPORT Q. 1. How do you review the performance of the company in 2008-09? A. Gujarat NRE Coke operates in a unique industry segment, where it neither has peers, nor is the industry and its dynamics easily understood. Suffice to say, the fortunes of the industry, which is closely interlinked with the commodity cycles of coke and steel, is highly volatile. This volatility ensures that there always remain a natural entry barrier for small, marginal players on one hand and on the other, provides the company with a unique opportunity to use the down turns to invest in capacities as per the company's long term vision and prepare the ground to reap the benefits of the inevitable upturn that follows. That is the reason why, at any given point of time, the figures do not reflect the complete picture of the company, as the actual benefits of the huge expansion and integration work that is in progress will be available in near future. In the longer term, on a point to point basis, the picture that emerges of the company's growth, is tell tale and quite satisfactory, especially in the face of global recession. Though the year that has gone by was one of the tough ones for enterprises across the globe, we had our focus on growth and expansion, and needless to say, the progress made has been as per plan and satisfactory. In a nutshell, while I today review the entire year's performance, it has been a eventful and challenging one, but we have been able to take up the challenge in our stride, seize the opportunities that have opened up, invested in future, to reap the benefits in multiples when they mature. Q. 2. You deal in a commodity that is a vital raw material to the steel making process, which in turn is cyclical in nature. Where do you see the steel industry heading? Where will this demand take Gujarat NRE in the benchmark year? A. The steel industry in India has been riding a perpetual growth trajectory for last five years except for a setback from the second half of 2008-09, caused by the global financial crisis. India's economy is largely domestic consumption led and accordingly it has been less affected by the deceleration in global economic growth when compared to other countries. As a result, Indian steel demand remains better than in many countries. The construction industry is expected to rise further due to the government's stimulus plan. The automotive sector is doing well. Hence, it is expected that domestic steel demand is going to recover soon and for the long term as well. According to the World Steel Association, India's apparent steel use is forecasted for 2009 is expected to see a 1.7% increase from 2008 and is expected to reach 58 million tonne in 2010 an increase of 8% YoY. As per recent announcements of the Steel Ministry, Government of India, Investment worth US$ 176.49 billion is likely to go into the steel sector by 2020, taking India's steel capacity to around 300 million tonnes. India is poised to be the world's 2nd largest producer of steel before 2016. As the fifth largest producer of steel, India now consumes an average of 25 - 30 million tonnes of coke. At about 300 million tonnes of steel, she will throw up a demand of roughly 120 - 150 million tonnes of coke by the year 2020, a sea of opportunity for merchant coke producers in India and a Mecca for coking coal producers worldwide. Gujarat NRE Coke Ltd is geared up to take advantage of increased demand of coke, in face of existing severe short supply in India. We plan to invest in two additional over one million tonne coke facilities in Andhra Pradesh and Gujarat, taking our total capacity to around 4 million tonne in next 3- 5 years. This would be further supplemented by increased production of coking coal in our Australian mines, which is slated to touch around 7 million tonnes per annum by 2014 -15. Q. 3. NRE Stands for Natural Resource and Environment. How do you relate coal and environment? How do you claim to be environ friendly? A. I believe that coal is the most environment friendly commodity to deal with. Human civilization is hungry for energy to have the industry running, to put the turbines of the power plant in motion, and the wheels of his transports moving. Think of a civilization without coal and fossil fuels, where the only prime source of energy would have been trees. Forests by now would have turned to barren lands. Civilization would have been near extinct today due to large scale felling of trees and forests for want of energy. Having said that, GNCL is an environmentally conscious and a responsible corporate citizen. The belief that environment conservation is fundamental to the survival of any organization combined with a desire to contribute more to the environment than what we acquire from it, has led us to adopt stringent pollution control measures. GNCL has in place the necessary safeguards to minimize environmental pollution through the complete combustion of volatile matter, and the gaseous emissions are well below the norms, by employing the best of technologies available. GNCL aims to extensively use wind energy to power its captive requirement. It has invested in 62 Wind Turbine Generators with a total capacity of 87.5 MW. The company is also investing in cogeneration of power using the heat generated during coke production to the tune of 60 MW, thus using all means at its disposal to be a green company. We take pride in our environment ethics-rain-water harvesting, green belt across all plants & wind energy to name a few. GNCL is a part of the emerging carbon credit market through Clean Development Mechanism (CDM) under the Kyoto Protocol agreement. The efforts of the company towards reducing greenhouse gas emissions have made the company eligible for earning carbon credits, which besides generating increased returns will strengthen its commitment of being a socially responsible citizen. Q.4. Gujarat NRE has been a pioneer in foraying into overseas coal mine ownership. The move has the potential of ensuring that you morphin to a global resource giant. At what stage are the company's Australian operations? A. India has severe shortfall of good quality hard coking coal. It is estimated that by 2013 as per the current projections, India would need more than 75 million tonnes of coking coal. Australia has excellent resource of hard coking coal and is the primary source for imports to India. We went to Australia in search of coal, but bought mines in 2004 and made it our second home. The Australian experience has been both challenging and satisfying. The investment and growth plans as well as the operations of our Australian subsidiary are perfectly on course and progressing as per plans. We have recently secured a Long Term Loan Facility of USD 50 million from a consortium of Indian banks which is being utilised to support & improve the existing infrastructure and facilities and develop new ones at NRE No. 1 & NRE Wongawilli collieries. The Gujarat NRE Group has earmarked plans to incur a further capital expenditure of over A$ 470 million by FY 2014 in addition to the existing A$ 250 million already incurred. Various other efforts are in place to ramp up production of ROM Coal from the mines to 7 million tonnes per annum by the year 2014-15. We aim to be one of the largest coking coal producers of Australia. We are the only independent Company listed in Australia having pure focus on hard coking coal while all the other hard coking coal reserves are owned by bigger resource conglomerates globally. Gujarat NRE has made an off-market bid for Rey Resources Limited, an ASX Listed Company, which is focusing on the development of its thermal coal exploration assets in the Canning Basin, Western Australia. The Company announced its maiden JORC Resource of nearly 500 million tonnes of thermal coal in April 2009. The successful completion of the proposed takeover would allow diversification of the Company's asset base and to become a major player in the coal mining sector with resources of over 1 billion tonnes of coking and thermal coal. Q.5. What is the differentiating factor that makes you peerless and the undisputed market leader? What are your plans to maintain the leadership position and increase stakeholder's wealth? A. In the past few years the company has made large investments in capacity expansion and integration. The company is ready to reap the fruits of these investments. The company's coke facility in Dharwad, Karnataka is ready for production. This provides the company extra leverage of enhanced capacity to meet the increasing demand of coke in India. Though the current recession had its effect in the consumption of coke in the global market, the domestic scenario has been bullish. India is one of the few countries that imported coke in 2008 and is also going to do so in 2009 as well, due to increased domestic consumption levels, which augurs well for merchant manufacturers of met coke in India. Demand for coke in India has been buoyant in the first half of 2009. Shortages of coking coal are adding to the pressure in the market. Weplan to increase our capacity further by setting two plants of 1 million tonne each in Andhra Pradesh and Gujarat to take advantage of this ever yawning gap of demand and supply of coke in India. Consistent and reliable supply of coking coal from Australian mines adds to the company's advantage. With China closing its coal mines and becoming a net importer of both coking coal and coal has created coke and coking coal a commodity of global short supply. Going ahead, with our coal mines in Australia increasing production at one end as well as increase in our domestic coke production capacity will strengthen our value chain, insulate us from external effects of adverse price swings and transform us from a coke manufacturer into an inte-grated coking coal mining company. This would inevitably increase our valuation to that of an integrated mining company higher than those obtained today as a converter. We expect that the combination of the three factors . in-creased capacity and sale, widened sale and enhanced valuation . will grow the value of our stakeholders over the coming years. Arun Kumar Jagatramka Chairman & Managing Director