Aussie tax expected at $2.7/t; no fundraising now: NRE Coke

24253 Investors following Guj NRE Coke. Share this News with them.

0

Like this story, share it with millions of investors on M3

Aussie tax expected at $2.7/t; no fundraising now: NRE Coke

CNBC-TV18 catches up with Arun Kumar Jagatramka, managing director, Gujarat NRE Coke to figure out the financial implication of the Australian carbon tax on the business and the way forward for the company.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Guj NRE Coke See previous management interviews See what other Experts & Brokerages are saying about Guj NRE Coke Guj NRE Coke BSE | NSE 29/05/12 Are Mutual Funds betting on Guj NRE Coke?

Even as Australia battles torrential rainfall that floods its carbon mines, the Carbon Tax Bill was passed by the Parliament yesterday. This is in line with its target to cut carbon emission to 5% below 2000 levels by 2020. A carbon tax is essentially an environmental tax levied on the carbon content of fuels. In the corporate world, it is seen as a form of carbon pricing.

Post the bill becoming a law, Australia's 500 leading greenhouse gas emitters will pay AUD 23 for every tonne of carbon they emit.

India joined the noble cause on July 1, 2010, introducing a nationwide carbon tax of Rs 50 per metric tonne of coal, both produced and imported into India. It is to be remembered here that coal is used to power more than half of the country's electricity generation.

CNBC-TV18 catches up with Arun Kumar Jagatramka, managing director, Gujarat NRE Coke to figure out the financial implication of the tax on business as the company is one of the largest Indian operators in Australia. Jagatramka says that the net impact of the Australian carbon tax is about USD 2-2.7 per tonne for the company. NRE currently produces nearly 70 million tonne from the region.

Allaying rumours of an acquisition, he says that NRE Coke is not looking at acquiring Shah Alloys or increasing its stake in it for now.  "In fact, the company will eventually monetize stake in Shah Alloys and SAL Steel," he says.

Given the current market volatility, raising equity is out of question now, the MD says.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Just explain this carbon tax to us and what kind of likely impact it may have for a company like yours?

A: We have issued a release earlier this week. Last two months, we have studied the impacts and all the provisions whatever has been in the public domain till now. Though the bill has been proposed yesterday, further details are awaited. But from our perspective, we believe the net impact of the carbon tax could be around USD 2 or USD 2.70 on per tonne of coal that we produce. From a longer term perspective, I don't think that it's something that should be bothering us. Particularly because coking coal prices remaining high, we are sure that whatever the impact, that will get passed onto the customers.

Q: You were earlier looking to raise some capital. What is happening with that FCCB plan or any kind of equity raising, given market conditions have been so volatile?

A: In the current market conditions and given the low valuations which do not justify the fundamentals of the company in any manner, I don't think it would make sense for us to look for any sort of equity raising, either FCCB or equity. So until market improves and we get a valuation which is near to the fundamental value of the company, I won't be going for any raising.

Q: Would you also rule out any possible acquisition, because you have been talking to Shah Alloys?

A: I don't know from where that news started flowing because we have not been talking about any acquisitions. We are in the derivatives industry and we had invested long back and there is no specific plan to acquire or anything as such. So all the rumours are totally false let me tell you all again.

Q: You do hold 5% in Shah Alloys and about 4% in SAL Steel, so what is it that you intend to do with this stake?

A: We would monetize it at a later date because we are not looking at acquiring those companies. We are focused on coke and hard coking coal, and there is no reason for me to move away from our core competence and the wonderful industry that we are in.

Q: So you are saying categorically that there is no interest that Gujarat NRE Coke has in terms of buying a larger stake in Shah Alloys or buying out the company because this is something the market has been talking about for many months now?

A: I don't know from where this started. Absolutely categorically I am saying that we are not interested in moving away from the core business that we are in.