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Shriram group floats subsidiary in US

BS Reporter  |  Chennai/ Chennai 

Haldia Coke and Chemicals Pvt Ltd (Haldia Coke), a Shriram Group Company, has floated a new company ‘Shriram Mineral Inc’ to acquire coal mines in the United States. The new company already acquired two coal mines for $23 million (Rs 105.8 crore) and planning to invest another $25 million (around Rs 115 crore) to acquire some more mines. Besides, the company also said it may look at reverse merger of Haldia Coke with Ennore Coke or an IPO.

Speaking to Business Standard at the sidelines of Ennore Coke Ltd’s Annual General Meeting, Company’s Whole Time Director and Chief Executive Officer said that Haldia Coke and Chemicals Pvt Ltd, which is the holding company of Ennore Coke Ltd, has floated the new company, which in turn invested $23 million (around Rs 105.8 crore) to acquire two coal mines.

One mine was acquired at Arkansas and other one was at West Virginia. “While the company will hold 65 per cent, the local operating partner will hold 35 per cent,” said Natarajan.

During the present year the company expects 120,000 tonnes of coal from these two mines and 400,000 tonnes every year there after. Total reserve in these two mines will be around 23 million tonnes, he said.

The company is planning to invest another $25 million to acquire some more mines, he said.

The acquisitions are mainly to meet the need for raw materials for subsidiary which are into metallurgical coke manufacturing.

Haldia Coke owns 80,000 tonne per annum capacity met coke plant at Nergundi in Orissa through its wholly-owned subsidiary Wellman Coke Ltd.

In addition, Haldia Coke holds a 60.86 per cent stake in Ennore Coke Ltd which owns a 130,000 tonne per annum capacity met coke plant and a by-product power plant at Haldia in West Bengal.

Both subsidiaries are in the process of increasing their capacities.

At Ennore Coke, the overall capacity, including contract, was around 400,000 tonnes by end of March 2010 and expected to increase to million tonne by next year.

“The proposed capacity addition will not require any investment since it will be through increasing the number of contract manufacturers,” said Natarajan.

The other subsidiary Wellman Coke Ltd is planning to double its capacity to 160,000 tonnes and is planning a 10 mega watt co-generation power plant. The total outlay of the project will be around Rs 70-75 crore which will be funded from the Rs 125 crore which was infused by Gaja Capital Partners, an India-focused Private Equity fund.

Commenting on Haldia Coke’s IPO plan, Natarajan said, “We may look at reverse merger or an IPO option.”

Commenting on Ennore Coke’s performance, he said, the company plans to achieve a turnover of around Rs 500 crore during the present fiscal and Rs 1,000 crore by next year.

The company has reported a turnover of Rs 388.95 crore in 2009-10 as compared to Rs 101.06 crore a year ago, an increase of 385 per cent.

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First Published: Thu, September 30 2010. 00:50 IST