No stake sale for Goa Carbon, says Chairman

Speculations of a stake sale in Goa Carbon was doing the rounds. However, Shrinivas Dempo, Chairman of the company denied any news of a stake sale. He tells CNBC-TV18, the company is sitting on a cash surplus generated from its divestment project and therefore, the company is not looking to tie up with any strategic investor.

Goa Carbon at present is exploring its project in China and it is in talks with global aluminium majors for the same, added Dempo. He further added that if they go ahead with the project, it could cost around Rs 400-450 crore with an equity component for more than Rs 100 crore. Below is the edited transcript of the interview on CNBC-TV18. Q: Can you give us some sense in terms of this speculation that the company is in talks to sell certain amount of stake in Goa Carbon. Could you confirm, deny and what would the plans be around this news?
A: I would like to deny that we are in talks with any fund or any strategic buyer for a 20% stake. We would not like to comment on the market buying and selling but, we are not in talks with anyone at the moment. Q: Is there any chance that you will be issuing fresh equity at all?
A: As we have said in the past, we are still exploring our China project. As and when we require funds for the China project, the game plan is that equity issue would be one of the options that we could look at.
_PAGEBREAK_ Q: Are you looking at some strategic investor for that project or for the company as a whole so that you can raise funds for that China project?
A: Not really at this stage. The group is still sitting on surpluses divested out of its mining assets in 2009. So we are quite comfortable to invest in the businesses that we believe have a lot of potential. For the time being, we do not see any scope for that unless there is an aluminum major or something like that where we find a strategic fit in the business. Q: What are the options that are on the table? Have you looked at a shortlist of possible aluminum majors who would be interested?
A: We are talking to many of the aluminum majors all over the world to get a feel for our China project. But at this stage, it’s too preliminary to comment on whether they would come in as strategic investors or they would just be as a long term buyer. Q: If need be, what would the equity requirement be or fund requirement be and you said that you had surplus since 2009 because of divestment of some mining assets. Just give us a sense in terms of surplus and what sort of further requirement would you have?
A: If we go ahead with the China project, we are looking at a total project cost of about Rs 400-450 crore. We are looking at an equity component probably upwards of Rs 100 crore. Q: How exactly is business doing at this point in time because we do understand that because of absence of viable exports and domestic orders there was a plant shutdown in Q4? Was there anything in terms of Q1 which was similar?
A: In terms of the business prospects the short-term is still very challenging. As you know the aluminum markets are down, many of the aluminum majors all over the world have stopped production. They have shut their capacities or toned down their capacities. But we are still bullish in the long run and that's why we are still exploring the China project. Q: But would you think that there is more to go by way of shutdowns or is it more or less to the end of that trend?
A: Difficult to comment because we are at a stage now that we are negotiating for fresh contracts with many of our buyers in India as well as overseas. This month will be very crucial for us because we have fulfilled most of our commitments of last year's contract. But this is typically the month up to mid August that we negotiate with many of the aluminum majors and we'll get a clear picture by next month. Q: What's your Q1 capacity utilization and what may be the margin impact of the commodity price falls?
A: It will be difficult to comment because the quarterly results are due. So we would not like to comment on it. Q: Not the margins but the capacity utilization?
A: Yes capacity utilization was low in the first quarter. Due to the lack of viable export orders, we couldn't utilize the capacity fully. It was more or less in line with the first quarter of last year. Q: You spoke about strategic talks with companies, aluminum majors. Any Indian companies that you would be in talks with at this point in time?
A: Not really, not something that could catch the depth or probably not to the level of detail. Rather we have just sounded a few aluminum majors that we have this plan. Q: What is the timeline for the China Project?
A: We are still exploring. Due to the current market conditions it will be difficult to put a timeline to the project. But we are ready financially to invest in the project if it's viable enough. Q: When do you think you will make that decision?
A: Probably in the next couple of months.