Guj NRE Coke

It is India’s largest independent producer of met coke with an installed capacity of 1.434 million tonnes per annum (MTPA). Through its subsidiary it also owns coking coal mines in Australia. Apart from this backward integration, the company has gone in for forward integration too – steel making and power generation through renewable sources. The company was in news last week after it stated that it had allotted 4.50 crore equity shares at Rs 21.08 per share to Mangal Crystal Coke, a promoter group company, pursuant to conversion of equity warrants. The conversion price was at a premium of over 15% to its market price then. And it has also issued and allotted FCCBs worth $20 million with an initial conversion price of Rs.22.50 per share. Well, as at 30th Sept 2012, the company was already sitting on a debt of Rs.1708 crore. Its interest outgo at end of H1Fy13 stood at Rs.124 crore, which was 14% of the topline. Thus apart from the debt burden, it is also incurring forex losses, which in Q2FY13 was at Rs.10 crore. Cash balance is not too reassuring at Rs.78 crore.

Financially, for Q2FY13, the company did better than it did in Q1 with a net profit at Rs.17 crore compared to the net loss at Rs.11 crore in Q1FY13. YoY, this was a 8% rise. But these financials do not give much relief as the company seems to be highly leveraged. Apart from the debt, 98.85% of the promoters stake of 33.40% (which is low to begin with) has been pledged. This has gone up from 88.49% stake pledged in Q1. For now, outlook for the company remains negative.