Gujarat NRE Coke Ltd plans to request the Securities & Exchange Board of India to raise the 5% ceiling on promoters’ stake in companies to 10% in the wake of foreign institutional investors pulling out their holdings in a big way because of the economic meltdown.
“We are planning to write from our side to the Securities & Exchange Board of India (Sebi) to relax the norm,” vice-chairman & managing director Arun Kumar Jagatramka said said.
He said this is the time promoters can pick up additional stakes and increase their holdings as FIIs are pulling out drastically.
“In Gujarat NRE, FIIs were holding 34%, which came down to 28% by September and is currently somewhere between 22-24%.” Jagatramka said.
“Our stake, bound by the 5% limit, has touched 4.8% and our current holding is 45% plus,” Jagatramka said.
He said promoters in most of the top hundred companies of the country have a holding of 40-45% and this was an opportunity for the companies to increase it.
Gujarat NRE Coke is the only Indian company that owns coking coal mines in Australia and is country’s largest independent producer of met coke (producing 1 million tonne at present).
Gujarat NRE’s profit after tax has moved up to Rs 197.15 crore for the second quarter to September 2008 from Rs 55.37 crore during the corresponding period last fiscal. Net profit for the quarter stood at Rs 102.75 crore against Rs 12.55 core in the year-ago period, an increase of 8.19%. Total income surged to Rs 496.05 crore in the quarter from Rs 102.07 crore in the same period last year.
The company reported a total income of Rs 873.69 crore for the half year to September 2008 against the Rs 250.96 crore during the year-ago period.
Jagatramka said in spite of a global meltdown and commodity prices as well as scrips coming down, coking coal prices have remained more or less stagnant, quoting at $340 per tonne on contract basis.
Coke contracts are being quoted at $500-550 per tonne, which is just a tad below the prices prevailing before the global economic crisis.
Jagatramka said around 50% of the world’s coke production goes on contract sales and the prices of remaining spot coke are more or less the same.
He feels although steel production in 2009 will not be below the amount 2008, growth in production will come down from the level of 15% to 5%. However, coking coal demand will remain the same since the demand-supply gap is huge.
India at present requires 22 million tonne of coking coal and by 2011 it will go up to 72m tonne considering the country’s 100m tonne steel-producing capacity by then.
India imports 6m tonne of coking coal to meet its requirement but in the coming years it will have to increase both domestic production and imports, although China (the main source of supply) is cutting down exports, Jagatramka said.