By IANS,
Kolkata : Metallurgical coke producer Gujarat NRE Coke is planning a differential voting rights (DVR) issue to hike its promoters’ stake and protect it from takeover threats, the company said Wednesday.
“We are planning to issue differential voting rights to the tune of Rs.1.2 billion, which will help us to take up our holding rights to 51 percent in the company,” vice chairman and managing director Arun Kumar Jagatramka said on the sidelines of the company’s annual general meeting.
The issue will be in the ratio of one DVR share for every 300 equity shares held, he said, adding it would be priced at Rs.1,000 per share, including a premium of Rs.990.
“The DVR will be issued within four to five months. The idea is to share the wealth of the company with the shareholders while keeping the controlling stake with the promoters,” Jagatramka added.
At present, the promoters’ stake in the company is 41 percent and institutional investors hold another 41 percent. The remaining 18 percent is hold by the company’s public shareholders.
“Though the institutions are happy with our management, we don’t want to take any risk as we produce coking coal, a key raw material for steel making, and could easily be a takeover target,” Jagatramka said.
“We will part finance the captive power plants in our Gujarat and Karnataka units through the Rs.1.2 billion raised from the DVR issue,” Jagatramka said, adding: “The rest will be funded through internal accruals.”
The company plans to set up four 15 MW power plants – two in a similar number of its units in Gujarat and two in the Karnataka unit, with completion slated for 2010.
For expansion of its Australian mines, the company will raise $100 million (Rs.4 billion) by off loading 10 percent of its stake in its Australian subsidiary Gujarat NRE Minerals Limited.
This will bring down its stake in the subsidiary to 75 percent from the present 85 percent, Jagatramka said.
Gujarat NRE Coke is among the largest producers of low-ash metallurgical (LAM) coke in India with a capacity of one million tonnes per year. This is set to rise to 2.5 million tonnes by December 2010.
“The cost of production is now at $450 (Rs.18,000) a tonne considering the import cost of coking coal of $300 (Rs.12,000) a tonne. Against this, our selling price of LAM coke is $600 (Rs.24,000) a tonne,” Jagatramka said.
The company earned a net profit of Rs.1.72 billion in 2007-08 against Rs.550 million in 2006-07.