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BL Research Bureau

Gremach Infrastructure, a construction equipment hiring company, has acquired a 75 per cent controlling stake in 11 coalmines in Mozambique.

While few Indian companies such as JSW, Tatas and Gujarat NRE Coke have acquired stakes in overseas mines, this is the first such move for Gremach.

This acquisition which signals a move by Gremach into a different business segment, appears tactical.

Given the global shortage in hard coking coal, these mines, expected to be rich in prime hard coking coal (about 200 million tonnes) could contribute significantly to Gremach’s coffers in the long-term. While prospecting in these areas is likely to begin by October, effective contributions from these operations are likely to flow in from 2008-09 only.

The company plans to fund the acquisition by way of a foreign currency convertible bond (FCCB) issue of $75 million combined with additional fund raising of about $100 million.

The stock, following this announcement, surged to its all-time high of Rs 266.6. It has since listing in April 2007 returned about 200 per cent.

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