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Gujarat NRE Coke, Power may merge

Kohinoor Mandal

KOLKATA, March 21

GUJARAT NRE Coke Ltd, manufacturers of low-ash metallurgical coke, is considering merger of group company, Gujarat NRE Power Ltd, into itself after the current accounting year, which will end on September 30, 2002.

Talking to Business Line after the 15th annual general meeting of the company, Mr A.K. Jagatramka, Managing Director, said that the proposal was being considered by the management.

Gujarat NRE Power is not a listed company, but its shares are widely held. The Jagatramkas had planned to go for a public issue, but decided against it due to the dull conditions in the primary market.

However, in 1995, private placements were made to the shareholders of Gujarat NRE Coke at price of Rs 14 per share.

"At present, Gujarat NRE Coke holds four per cent in Gujarat NRE Power. We, the promoters, are holding about 60 per cent, and the rest is held mostly by the shareholders of Gujarat NRE Coke. We may carry out a corporate merger of these two companies by issuing shares of the Gujarat NRE Coke to the shareholders of the other company," Mr Jagatramka said.

Gujarat NRE Coke has its manufacturing facility at Jamnagar in Gujarat and its total capacity is 2.08 lakh tonnes per annum. Of this total capacity, Gujarat NRE Power owns about 78,000 tonnes per annum.

"A part of the total manufacturing facility is owned by the Gujarat NRE Power. Hence, to integrate the existing infrastructure we can merge the two companies," he further explained.

According to him, the net worth of Gujarat NRE Power is Rs 4 crore and its annual income is about Rs 1.8 crore. It is a debt-free and profit-making company.

On the other hand, the flagship of Jagatramkas, Gujarat NRE Coke, has recorded significant growth. For the year ended September 30, 2001, the company registered a 20.52 per cent increase in turnover to Rs 61.27 crore from Rs 50.84 crore. The profit-after-tax increased by 146 per cent to Rs 4.16 crore from Rs 1.69 crore. Operating profit jumped by 221.3 per cent to Rs 8.13 crore from Rs 3.67 crore.

During the current accounting period, the company is hoping to increase the turnover to Rs 75 crore and net profit to Rs 9 crore.

Gujarat NRE Coke is also planning to set up a power plant on the waste heat generated from the coke ovens at a cost of Rs 12-13 crore. Initial capacity of this plant will be 4-5 MW, but it will be later increased to 7-8 MW. This will help the company to reduce its electricity expenses by Rs 3 per unit.

Gujarat NRE Coke is listed on the stock exchanges of Kolkata and Mumbai and its maiden public issue was carried out in May 1994.

However, in 1997, there was a tussle between two groups of the Jagatramka family for ownership and management control. The current management got its power after it got favourable verdicts from the Supreme Court and the high courts of Gujarat and Kolkata.

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