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Update on Gujarat NRE coke.

I wrote about Gujarat NRE Coke on 19 Oct 2007. The initial write up can be viewed here.

Yesterday, I came across an interview by Capitalmarket magazine with Mr Arun Kumar Jagaatramka, Vice Chairman and MD of Gujarat NRE Coke on the future plans. I reproduce below few important points from the chat.

1. The ongoing Metcoke prices are around USD300-310 CIF compared to USD225-230 in March-May 2007.

2. Gujarat NRE coke has the following subsidaries:

a. Bharat NRE Coke India - Met coke plant - holds 60% stake.

b. India NRE Minerals - Listed in Australia and holds 93% stake.

c. Gujarat NRE Resources NL - Listed in Australia - owns NRE Avondale and Elouera Collieries and six mining licenses for exploration of gold, iron ore and coal. The stake held by Gujarat NRE is 84%.

3. Has an offtake right for 400,000 tonnes of ultra-low ash coal per annum from Pike River coal company in New Zealand.

4. Planning to mix NZ coal with the coal from Australian mines. Expected addition to the bottom line by USD20-50 per million tonne in 2008.

5. Coke-oven unit being set up in Dharward Karnataka would go live in phases by Oct 2008. Expected production of coke from this unit is 50,000 tonnes of coke by FY 2009.

6. Setting up a railway siding facility in Dharwad which reduce the cost by USD5 per tonne.

7. Capex planned in the next two years is around Rs175 crores and met through internal accurals and debt of Rs100 crores.

8. Turnover is expected to increase to Rs1000 crores in FY 2008 from Rs500 crores in FY 2007.

The above developments if takes place within the timelines mentioned would definitely be a positive trigger for the stock. The company has exhibited good excution skills in the past when it acquired mines in Australia, went for IPO in Australia etc., Therefore, I believe they would be able to meet the targets they have set for themselves.

I reiterate that Gujarat NRE coke is good long term bet. Pls wait for price dips to happen and buying in sub-90 levels would be a good price.

Disclaimer: This is not an invitation to buy or sell shares. The views expressed are my personal opinion and pls consult your financial planner before taking your decision. I own the shares of Gujarat NRE Coke.

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