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Mar 20, 2012, 06.27 PM IST | Source: CNBC-TV18

Mining tax not a problem for at least 5-7 yrs: Guj NRE Coke

Speaking to CNBC-TV18, Arun Kumar Jagatramka of Gujarat NRE Coke says that the contours of the mining tax are such that it will not impact new companies with large capex such as theirs.

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In a knocker for mining companies that operate mines in Australia, the Australian senate has pushed through into law, a 30% tax on iron ore and coal mining companies. While this is aimed at rising nearly USD 11.2 billion for the exchequer, Indian players such as Gujarat NRE Coke could see a cut at the bottomline.

While the tax imposition was still under discussion, Arun Kumar Jagatramka of Gujarat NRE Coke had estimated a rough net impact of USD 5 million. However, speaking to CNBC-TV18 today, he says that the contours of the mining tax are such that it will not impact new companies with large capex such as theirs. This mining tax is on the super profits as calculated after deducting all the expenses as well as capital expenditure, he explains. State royalties are also deductible, he says.

Also read: Mining tax may push coal cost to record high

According to Jagatramka, no impact is expected on Gujarat NRE Coke for at least the next five-seven years, and even after that, it will be dependent on the profits the company makes.

The stock nonetheless reacted to the news today, tanking 2.51% to Rs 23.

Overall, this 30% tax could see a pass-through in coal prices, says Jagatramka. "Part of this tax could be passed on and coking coal prices could go into a new higher territory," he says.

Guj NRE Coke stock price

On July 28, 2014, Gujarat NRE Coke closed at Rs 11.30, down Rs 0.41, or 3.5 percent. The 52-week high of the share was Rs 19.32 and the 52-week low was Rs 7.60.


The latest book value of the company is Rs 26.12 per share. At current value, the price-to-book value of the company was 0.43.

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