Gujarat NRE Coke, FCGL merger to augment cash flow

Ahmedabad, Mar 16: The merger of Gujarat NRE Coke Ltd (GNCL) and its cash-rich sister concern FCGL Industries would help the two companies garner more cash flow and reserves to increase production at their coalfields in Australia.

Explaining the basis of the strategic move, GNCL Vice Chairman and Managing Director Arun Kumar Jagatramka said the merger issue will be discussed at the extraordinary general meetings of both the companies on March 22. It has already been approved by the board of governors of both the companies in December last.

In pursuant to the Calcutta High Court order of February 23, both the companies have informed the Stock Exchanges and all the shareholders about the EGMs, along with the Scheme of Amalgamation, he informed.

Mr Jagatramka said that while GNCL is the country's largest non-captive manufacturer of low-ash metallurgical coke, FCGL is in the business of financial management, investment and leasing.

He said the companies have also informed the Calcutta Stock Exchange about the proposed 1:1 share swap ratio between the two and raising more capital but not exceeding USD 100 million through ADR, FCCB and/or GDR.

He said the Kolkata-based GNCL, a profit-making organisation since its inception in 1986, has recently forayed into steel manufacturing by setting up a mid-sized greenfield plant near Bhachau in Kutch district at a cost of Rs 50 crore.

He said that the plant, at present, produces 3,00,000 tonnes per annum (tpa) of billets, blooms, ingots and hot rolled steel from MS scrap, sponge iron, ferro alloys and CI scrap as it would be gradually raised to 1.0 million tpa.

It is also in the process of setting up a captive power plant of 20 megawatts using the waste heat generated by coke oven plant, thereby saving in power cost. It has also set up a 25 MW wind farm in Kutch itself to provide cheap green power to the steel plant, he informed.

Besides Australia, Mr Jagatramka said, the company was exploring acquiring mining projects in South American countries like Peru and Chile for sustained growth in the future.

GNCL's coke manufacturing facility at Jamnagar produces about two lakh tpa of low-ash metallurgical coke.

UNI