Higher prices help Gujarat NRE Coke double its Q1 PBT

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Kolkata, Jul 18 : The bull run in coking coal prices has helped Gujarat NRE Coke Ltd, India's largest mettalurgical coke producer with coking coal mines in Australia, post more than double profit in the first quarter of the current fiscal compared with the year-ago period. Price realisation for coke also witnessed over a two-fold increase during the last 11 months.

The company reported a profit before tax of Rs 113.69 crore on net sales of Rs 377.64 crore for the quarter to June 30, 2008, compared with a profit before tax of Rs 50.21 crore on sales of Rs 148.89 crore during the corresponding period last fiscal.

Chairman Arun Kumar Jagatramka said the company could realise Rs 17,100 per tonne of coke as against Rs 8600 duirng the same period of the previous fiscal.

He said Gujarat NRE has generally been a spot market seller, but with prices rising, it has entered into some long-term contracts for supplying both coking coal and coke.

The company, in view of the bull run in coking coal prices, plans to invest $350-400 million in its two mines in Australia and take production up to 7 million tonne by 2012-2013 from 0.5m tonne in 2007-08. Gujarat NRE expects to produce 1.2m tonne in 2008-09 with its second mine becoming operational this quarter.

The company, through its 100% subsidiary, Gujarat NRE Minerals Resources Ltd, listed in Australia, operates Gujarat NRE-I and Wongawilli collieries in New South Wales with estimated reserves of 300m tonne and 200m tonne, respectively.

"Coking Coal is one of the major constraints in the Indian growth story, and keeping that in mind Gujarat NRE has embarked on acquisition of coking coalmines," Jagatramka said.

India's proven reserves of prime coking coal are around 4.6 billiion tonne, only 5% of its overall proven reserves, and the quality is more or less unsuitable for steel making.

Jakatramka said, "While steel production in India is expected to touch the 100m tonne mark by 2011-2012, coking coal production is expected to increase marginally, from 8m tonne to 9m tonne during the same period. So, coke producing companies have a great fututre and Gujarat NRE Coke has invested in such coking coal mines, which have an estimated life of at least 100 years."