GMDC

Suresh Rathi

Reporting-

Gujarat Mineral Development

Corporation Ltd. Brown Gold….

Wealth Creator Thru Systematic Investment

Suresh Rathi

REPORT 0809/008 11 JULY 2008

9, Parekh Vora Chambers 66 N.M. Road, Fort Mumbai - 400023

Phone: +91-22-22666178 Fax: +91-22-66344007

E-mail: [email protected]

SURESH RATHI SECURITIES PVT LTD.

Research Report No 0809/008 11th July 2008

GUJARAT MINERAL DEVELOPMENT CORP. LTD.

CMP: Rs. 262/- Company History: Gujarat Mineral Development Corporation (GMDC) was established by the Government of Gujarat, in the year 1963, for developing important and major mineral resources of the State. GMDC is one of the leading mining and mineral processing companies. Company is into exploration of energy minerals like lignite, fluorspar and other minerals like Calcined bauxite, alumina, manganese, etc. In Oct, 1997 the Government of Gujarat came out with an offer for sale of 82,68,000 equity shares of Rs. 10/- each at 140/- thereby diluting its stake to 74%. The Government intends to disinvest further equity in a period of 24 months so as to bring down its holding in GMDC to 49%-51%. Gujarat Mineral Development Corporation (GMDC) is the largest merchant seller of lignite in India. Though Neyveli Lignite Corporation (NLC) is the largest producer of lignite, GMDC is the largest seller of lignite, as most of NLC’s lignite production gets consumed captively for power generation. GMDC supplies lignite to various user industries including cement, textiles etc and has a much diversified mix industry and companies for supply, thereby largely insulating itself from concentration on few user industries / clients.

Stock Data

Lignite is the mainstay product of the company & company is the largest merchant seller of lignite in the country. Lignite is popularly known as ‘Brown Gold’ across the world and is found abundant in Gujarat. It has new mines under development at Rajpardi, Bhavnagar and Tadkeshwar with reserves of 125 million metric tones. Increasing volumes from new mines will lead to volume growth. It should be noted that, lignite from these mines are of higher quality and will fetch better realizations. Beside, company has also increased price of lignite w.e.f. Feb 2008. GMDC has been supplying important minerals like fluorspar to industries like steel, aluminum, refrigerants, foundries, etc., since 1968. GMDC commenced with two projects, consisting of the silica sand crushing plant at Surajdeval in Saurashtra and the fluorspar project at Kadipani in Baroda district. In early 70's GMDC established the Bauxite Calcination Plant to start with its Bauxite operation in Saurashtra and Kutch. With the commencement of the Lignite Project in Panandhro in Kutch in 1974 and the opening of the second mine at Rajpardi in Bharuch district in early 80s, the growth of GMDC showed a tremendous increase. The company re-started its Fluorspar Project at Kadipani. The 125 MW unit was commissioned in Mar.'03 and the second 125 MW unit six months thereafter at Nanichher at Kutch. During 2004-05 the company has commenced its operations in the mine at village Tadkeshwar in Surat District which was leased by the company. This mine has 30 Million tonnes mineable reserves and the full-fledged Lignite dispatch to these industries has been started from October 2005. Further the company has achieved commissioning balance of plant packages such as Sea Water Intake System, Desalination Plant, Fuel Oil Handling System, Cooling Water System and Air Compressor System & Other Auxiliary Systems. The company has completed the refectory dry out procedure of the Boiler Unit I lead to light up of the Boiler by oil in 2004. The company has commissioned the 1st unit in September 2005 and 2nd Unit (in December 2005) three months thereafter. The company also set up a Alumina Plant in Kutch, Gujarat Alumina & Bauxite Ltd and this project has got necessary approvals from the Government during 2004-05. Further the company has signed a Memorandum of Understanding with RBG Minerals Industries, Udaipur to develop the Ambaji Group Mining and a concentration project. The plan for

Nse Code GMDC Ltd

Bse Code 532181

Industry Mining

Face Value Rs: 2

Reuters GMDC.BO

Bloomberg GMDC IN

At A Glance Equity (Rs Cr.) 31.80

Book Value 66.77

EPS 16.60

PE Ratio 15.80

Market Cap (Rs Cr.) 4167.39

52 Week High/Low 634/166

Dividend Yield (%) 0..76

Last Dividend (%) 100%

Aashish Chitlangi Institutional Desk: [email protected] +91-9820186491

Rahul Bhandawat

Research Desk: [email protected] +91-9321413828

Reporting….Gujarat Mineral Development Corporation Ltd.

Wealth Creator Thru Systematic Investment - 2 -

setting up of Multi Metal Project at Ambaji and Modernisation-cum-expansion of Kadipani Project is under progress. Further development of manganese mine in Panchmahals and Vadodara Districts is also in progress. The company is also implementing 2x125 MW Lignite based Power project at Village Nani-Chher, Kutch. The 1st unit has been synchronized with grid on 31st March 2005. Both the units are involve in commercial operations from 2005-06. Business Overview: Lignite: Lignite popularly termed as 'Brown Gold' all over the world. Gujarat is rich in high grade Lignite. To explore this GMDC brought in one of the world's best known mining technology in this field - TAKRAF of Germany. This has made GMDC a largest merchant seller of lignite in the Country. GMDC's operations have expanded geographically to other Indian States. Lignite is more cost effective than coal User industries like power, cement and textiles have demonstrated that use of lignite as a substitute to coal is highly cost effective. Only major disadvantage of lignite is that it is highly combustible and hence cannot be transported to long distances. Hence, user industries need to be in the near vicinity of the lignite mines. With global prices of coal scaling up significantly in the past one year, mainly due to surge in demand from China, these increases will get reflected in GMDC’s profitability with a gestation period. The lag time or gestation period is partly due to long term agreements with user industries. As per current regulations, NLC will be the sole lignite mining authority in India, except for GMDC in Gujarat. Though user industries get lignite blocks for mining, they are not allowed to sell lignite to third parties. The early mover advantage and fairly large user base insulates GMDC’s profitability. Sector Overview: Mining for coal, Lignite, metals and other industrially and economically important minerals forms the core sector of a country's industrial empire. Like elsewhere in the world, mining industry has shown a rapid expansion in India too. According to the Mineral Year Book (1980 - 1986), the estimated values of mineral production since 1947 to the eighties went up by over 100 times. The growth of mining industry is also reflected in the economic value of production. The value of mineral production rose from 64 crores in 1947 to 1900 crores in 1992 - 1993. The share of metal mining sector is about 13% in the total output. Lignite reserves in the country are approximately 27.45 billion tonnes. Neyveli Lignite Corporation Ltd. (NLC), a public sector undertaking with headquarters at Neyveli in Tamil Nadu is engaged in exploitation of lignite deposits in that State. Apart from this, M/s. Rajasthan State Mineral Development Corporation is also engaged in exploitation of lignite deposits in Rajasthan. M/s. GIPCL & GMDC is also engaged in generation of power by exploiting lignite deposits in Gujarat. NLC has two lignite mines with a total installed capacity of 17 million tones, two thermal power stations, a fertilizer plant and a briquetting and carbonization plant. The total area under mining in India is equivalent to 1/3 of that under agriculture. Mining leases in India are spread over an area of 800,000 hec. In 1992 there were about 4,052 working mines in India of which 2,854 were for mining of non metallic minerals, 720 for mining of metallic minerals and the remaining 478 for mining of coal and lignite. Lignite mining in Gujarat The occurrence of lignite in Gujarat has opened new avenue for industrial development.

Lignite popularly termed as 'Brown Gold' all over the world. Gujarat is rich in high grade Lignite. GMDC Ltd. is the largest merchant seller of lignite in the Country.

The total area under mining in India is equivalent to 1/3 of that under agriculture. Lignite reserves in the country are approximately 27.45 billion tones.



Precise figures for the total estimated reserves of lignite in Gujarat are not available but latest investigations suggest about 700 million metric tons (MMT) which may be revised upwards to as much as 2000 MMT with future explorations. The present annual production is around 9 MMT, the bulk of which comes from Kutch, followed by a small production from South Gujarat. Currently, it has been estimated that lignite occurs in about 1200 sq.km area in Kutch, about 1000 sq. km in Saurashtra and 800 sq. km. in South Gujarat. Kutch has lignite deposits of the order of 210 MMT occurring chiefly at Panandhro, Akrimota, Umarsar, Mata-no-Madh-Lefri and Lakhpat-Dhedhadi in Lakhpat Taluka. Kutch lignite is favourable for utilisation in power generation because of its high calorific value and low moisture content. Gujarat Mineral Development Corporation (GMDC) has been mining lignite from Kutch since 1974 at Panandhro. The production of lignite from Kutch, which began with a modest 0.013 MMT in 1974-75 and nearly 9.9 MMT in 2008.

Lignite mining projects in Kutch

Due to its location and the distance from the various coalfields of the country, Gujarat is not getting adequate supply of coal for its industries. Also the landed cost of coal makes its use uneconomic for industrial use. Under such circumstances, lignite has contributed significantly towards the growth of industries and the power sector in Gujarat. Lignite is consumed by industries, such as textile manufacture & processing, chemicals, roofing tiles, cement, bricks, power generation, etc. The Gujarat State Electricity Board has recently established & commissioned lignite based 2X70 MW Thermal Power Station at Panandhro in Kutch district and is consuming about 1.2 MMT of lignite annually. Based on the success of this power plant, the State Government proposes to establish three more lignite based power stations of 250 MW each in Kutch, Surat and Bhavnagar and also to reserve the Panandhro and Akrimota Lignite deposits for power generation only. Under the circumstances, it has become necessary to develop other deposits in the state to meet the increasing lignite demand of other industries. In view of the above facts, Gujarat Mineral Development Corporation (GMDC) Limited, proposes to augment the lignite production in Kutch area of Gujarat by opening 3 new lignite mines for achieving an annual combined target of 8.5 MMT of lignite extraction.

Project details

The salient features of the three mining projects are provided below.

GMDC

Lignite Projects

Panandhro

Rajpardi

Mata-No-Madh

Tadkeshwar

Neyveli Lignite Corporation Ltd. (NLC) will be the sole lignite mining authority in India, except for GMDC in Gujarat. Though user industries get lignite blocks for mining, they are not allowed to sell lignite to third parties. The early mover advantage and fairly large user base insulates GMDC’s profitability. About 4,052 working mines in India of which 2,854 were for mining of non metallic minerals, 720 for mining of metallic minerals and the remaining 478 for mining of coal and lignite. Precise figures for the total estimated reserves of lignite in Gujarat are not available but latest investigations suggest about 700 million metric tons (MMT) which may be revised upwards to as much as 2000 MMT with future explorations.



Akrimota Lignite Mining Project Total mine lease area 2224.00 ha Revenue `waste land’ 1560.00 ha Private land 664.00 ha Forest land nil Mine life 40 years Total reserves 81.80 MMT Extractable lignite reserves 55 MMT Stripping ratio 1:2.45 Tons/m3 Proposed annual production 1.5 MMT Utilisation of mine product Fuel for captive power plant Mining technology to be adopted Mechanised open cast mining Land lock due to external dumps 104.00 ha Top soil dump stockpile 11.0 ha. Back filling Back filling proposed after 3 years Void/Water body area 58.25 ha. Man power employment 675 persons/day

Mata-no-Madh Lignite Mining Project Total mine lease area 1805.17 ha Revenue `waste land’ 1314.71 ha. Private land 490.46 ha. Forest land nil Mine life 40 years Total reserves 24.60 MMT Extractable lignite reserves 24.60 MMT Stripping ratio 1:12.38 Tons/m3 Proposed annual production 6 MMT Utilisation of mine product Meet lignite demands of industries Mining technology to be adopted Mechanised open cast mining Land lock due to external dumps 39.00 ha Top soil dump stockpile 18.0 ha Back filling No Void/Water body area Not clear Man power employment 276 persons/day

Umarsar Lignite Mining Project Total mine lease area 2683.28 ha Revenue `waste land’ 2407.40 ha. Private land 257.88 ha. Forest land Nil Mine life 22 years Total reserves 26.60 MMT Extractable lignite reserves 22 MMT Stripping ratio 1:9.10 Tons/m3 Proposed annual production 1.0 MMT Utilisation of mine product Meet lignite demands of industries Mining technology to be adopted Semi open cast mechanised Land lock due to external dumps 110.75 ha Top soil dump stockpile 35.0 ha Back filling Back filling proposed after 3 years Void/Water body area Not clear Man power employment 739 persons/day



Panandhro – Kutch, Gujrat Large reserves of Lignite, a valuable energy mineral, are located in Kutch district of northern Gujarat. Deposits of 200 million tones of lignite have been identified at different locations and geological investigations are on to locate more lignite. Panandhro, the largest of these pockets, has been developed as major mining center of Lignite which is used as a fuel in a large number of process boilers in the state as well as to produce power to meet ever. Mining activity was started here in 1974 and substantial expansion was undertaken in 1988, 89 and 90. Current production from Panandhro Mine is about 81 MM tones per Year. This lignite is being supplied not only to GEB's Power Station at Panandhro but also to over 2000 industrial units (textiles, chemicals, Ceramics, bricks, captive power etc.) all over the state.

YEARWISE LIGNITE PRODUCTION IN M.T.

Project 2007-08 2006-07 Panandhro 81,32,966 70,90,849

Rajpardi 3,90,642 1,34,055 Mata-No-Madh 6,64,504 5,02,616 Tadkeshwar 7,79,052 2,64,452

Kadipani: Flourspar Project:

Fluorspar Project

Kadipani

Acid Grade Fluorspar

As much as 11 million tones of low grade (20% of CaF2) are available in the hills of Ambadunger. Low grade ore is extracted in the open pit mine and is upgraded, through froth-flotation process, in a 500 tpd beneficiation plant to produce 96% CaF2 Acid Grade and 90% Caf2 Metallurgical Grade. 1. Acid Grade Fluorspar > 96% caF2 Used in manufacture of: Aluminum fluoride, synthetic Cryolite, Anhydrous HF, Fluorine chemicals. 2. Metallurgical Grade Fluorspar > 85% caF2 Used as most powerful flux for melting and refining of steel in integrated Steel plants and Foundries.

Metallurgical Grade Fluorspar



GMDC has been mining bauxite in two centres for last two decades. Average total bauxite output is about 1,00,000 tones per year.

OTHER

PROJECTS

Bauxite Gadhsisa Group Of es In Kutc

& Bhatia Mines Jamnaga

Gadhsisa group of mines & Bhatia mines

Large reserves of plant and non-plant grade bauxite are found in Kutch district as well as Jamnagar dist. GMDC has been mining bauxite in these two centres (Gadhsisa group of Mines in Kutch and Bhatia Mines in Jamnagar) for last two decades. Average total bauxite output is about one lakh tones per year. Plant Grade bauxite is being marketed to refractory industries, chemical industries etc. all over the country some quantity of non-plant grade is being exported from time to time.

Corporation has introduced Dual Firing System to operate the plant on 70:30 ratio of Petcoke and furnace oil as a fuel; whereby the cost of production is expected to reduce by about Rs.500/- per MT of calcined bauxite.

Gadhshisha Calcination Project In order to produce further value-added material from plant grade bauxite, GMDC has set-up Calcination plant at Gadhshisha where bauxite is calcined at plant temperature in a rotary kiln. The plant capacity is 50,000 tones of Calcined Bauxite per year. Recently, the Corporation has introduced Dual Firing System to operate the plant on 70:30 ratio of Petcoke and furnace oil as a fuel; whereby the cost of production is expected to reduce by about Rs.500/- per MT of calcined bauxite. As such, the profitability would increase substantially and company would be in a position to withstand stiff competition in the market in sale of its product. The chemical analysis of Calcined Bauxite produced in plant is:

Al2O3 Min.86% SiO2 Max.3.5% Fe2O3 Max.3% TiO2 Max.2% CaO Max.1.2% LOI Max.0.5% Bulk Desnsity +3

Ambaji multi metal project GMDC Ltd. is holding a Mining Lease for Base Metal at Ambaji since July, 1973 for about 7.5 millions tones of base metal deposit consisting of lead, zinc and copper ore, containing 10% total metal contents. The Corporation has entered in to MOU with RBW Minerals Industries Ltd. a subsidiary of

Min h

In r

Gadhshisha Calcination

Project

Ambaji Multi Metal Project

Akrimota

Power Project



Binani Industries Ltd. in Sept., 2001, and has formed a joint venture Company; known as RBG Minerals Industries Ltd. In-principle approval for the MOU was obtained from the Government of Gujarat. GMDC Ltd will have 25% equity in this Joint Venture Project. The ore obtained from GMDC's Mine at Ambaji as well as from RSMM's mine at Deri and another base metal deposit at Basantgarh in Rajasthan, will be fed to the Mineral Beneficiation plant proposed at Ambaji for the production of clean concentrates, which shall be the raw material for different smelters elsewhere in the Country for extraction of metals like Lead, Zinc and Copper. By combining the three different deposits, it is proved that the project is technically as well as commercially viable. The pre feasibility report showed good profitability of the project with IRR of 46% and payback period of 2.5 years. The Detailed Feasibility ensured the projects’ viability and USTDA declared the project as “Robust". An investment of Rs.131.7 crores was envisaged in the first phase. The technology under consideration by the Joint Venture will require comparatively very small area. As a result, the requirement of forest land has been reduced from 1152-82-18 hectares to 171-38-90 hectares by a modified mining proposal. The modified proposal also included the allocation of Rs.3.0 crores for eco-restoration and rehabilitation of wild life in the proposed project. The old quarters built in the past will be used for the project activities and no new construction is proposed in the lease area. The project is located in the back ward region generating local employment to the tune of about 180 people directly and about 1000 people indirectly which will bring social and economical benefits to the society at large. Over and above Rs 12 Crore per annum as royalty on the ore mined along with taxes applicable on the produce will be remitted to the State exchequer. Akrimota power project GMDC is implementing a 2X125 MW lignite based Akrimota Power Project at village: Chher Nani, Tal: Lakhpat, Dist. Kutch, Gujarat. The first unit of 125 MW has been synchronized on 31.3.05. The proximity of the fuel source will make this plant one of the most economical. The CFB boilers and its auxiliaries are being supplied by M/s. Alstom, Germany and Turbine and its auxiliaries are being supplied by M/s. Ansaldo, Italy.

• The boiler Hydro tested in Jan.2004 • The Turbine and Generators are boxed up. • About 95% of progress is achieved at site. • Main Boiler lighted upon 15th Dec.2004. • The first unit has been synchronized on 31.3.05 • 1st unit is under lignite trials. • An amount of Rs.1350 crores have been incurred on implementation of this

project. • A de-salination plant based on MED technology has been commissioned. • A 100 meter green belt surrounds the entire site. • Limestone yields at the mines match stipulated standards.

Moreover, the project has evoked tremendous investor confidence, from all over India. Against the requirement of Rs. 1116 crores, financial institutions and Banks have pledged assistance for Rs. 1400 Crores. The Financial closure for this project has been achieved in March 2003. The Corporation has undertaken debt restructuring exercise for the entire debt of Rs.1116 Cr. and the same was successfully completed in Sept.2004 @7.25% during construction and 7% after commissioning for the entire debt from Power Finance Corporation.

The company has been allotted two coal mine blocks of 350 MT and 250 MT in Chattisgarh & Orissa, which are expected to be developed over the next 4 years. These mines will act as a feed for the power projects of 2750 MW and 1750 MW.



Funding Pattern Total Project cost 1395 Crores GMDC (Equity) 20% Financial Institutions & Banks (Debt) 80%

Sources of Debt Power Finance Corporation Rs. 1116.00 Crores

Site Details Village Chher Nani Taluka Lakhpat District Kutch State Gujarat Nearest Town Bhuj/ Gandhidham Distance From Site 150 Km / 220 Km Nearest Seaport Kandla - 220 Km Nearest Airport Bhuj Seismic Zone Zone-V As Per Is 1893-1975

Type of Fuel LIGNITE Source Existing PANANDHRO AND AKRIMOTA Mines Distance 20 KM approx. Reserves 50 Million Tonnes approx.

Type of Additive LIMESTONE Source Over Burden of Mine Distance 20 KM approx. Reserves 30 Million Tones approx.

Alumina Project The State of Gujarat, is bestowed with large Bauxite deposits estimated about 104 Million Tonnes. About 90% of these deposits occur in three Districts - Kutch, Jamnagar and Junagadh. About 15% of the bauxite reserves are of Plant Grade having Al2O3 content 58% and above, and are used in Refractory, Abrasive and Chemical Industries. But majority of the non-plant Grade Bauxite has 50%-52% AI2O3 content. The non-plant Grade bauxite has no domestic market and for existing Alumina Plants in the country, its consumption becomes uneconomical for long transportation cost as most of the alumina plants are located on eastern side of the country. At present the non-plant grade bauxite of Gujarat is exported in small quantities to Cement Plants in the Middle East. This non-plant grade bauxite can be processed to produce Alumina/Alumina based chemicals profitably and generate a very plant value addition (from raw bauxite at Rs. 500/- PMT to Alumina to Rs. 9000/- PMT). Therefore, to utilise the vast deposit of this non-plant grade bauxite, Govt. of Gujarat constituted a Committee to select suitable agency out of the two parties, viz.Ashapura Group and Aluchem Group who had evinced interest to set up and implement an Alumina/ Alumina based Chemical products plant in Kutch District of Gujarat. The Committee, after holding

GMDC is setting up 6 mtpa cement plant in joint venture with Jaiprakash Associates in Gujarat. To power this cement plant, company would have another joint venture with Gokul Group (oilseed processing major) to set up 135 mw lignite-based power plant in Surat.



several meetings and presentations with both the parties, submitted its report to State Government and Government decision is expected shortly.

GMDC is also planning to forge tie ups with parties in Pondicherry, Kerala, Delhi and Maharashtra in acquiring coal blocks for joint development and setting up power generation plants. The company is planning to foray into Cement, Power, SEZ and port business, thereby leveraging its coal control capabilities. GMDC has planned to enter into cement and power business, through two different JVs, which will ensure a captive coal customer to the company in each venture.

Technical Feasibility Report and site selection of plant shall be taken up after selection of suitable agency by State Government.

Share Holding Pattern:

Shares Holding Pattern (%)

Institutions12%

Public & Others

7%

Foreign1%

Non Promoter

Corp. Hold.5%Promoters

75%

Financial Ratios:

Ratios 0703 Return on net worth (RONW) % 11.66

Return on capital employed (ROCE) % 13.45

Cash profit margin % 38.00

Current Ratio % 1.38

Debt Equity Ratio % 1.26

Interest Cover % 3.28

Long Term Debt-Equity Ratio % 1.26

APATM % 16.04

Equity Returns:

Exchange Closing 30 Days 3 Months 6 Months 1 Year BSE 262.10 -9.10 -17.46 -44.86 53.73Average Volume 248825 177459 133591 105934NSE 262.85 -8.94 -17.10 -44.72 54.25Average Volume 233351 183767 144613 114532

Profit % on Sales:

The company has entered into a JV with Jaiprakash Associates for setting up of a cement plant in Kutch with a scaled up capacity of 6 MTPA with an initial investment of around Rs 700 crores.

Financial Y-O-Y

4323.98

5888.16

9807.57

352.53 944.74

2639.31

0.00

2000.00

4000.00

6000.00

8000.00

10000.00

12000.00

2006 2007 2008Year

Sales Pat



Profit % on sales

8.15

26.91

16.04

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2006 2007 2008

Year

% on sales

Earning Estimates:

Earning Estimates ( Rs in Cr.)

Year 2010 (E) Year 2009 (E) Year 2008 Year 2007 Year 2006 Net Sales 2525.59 1549.44 980.66 588.96 436.23 PBIDT 1659.15 964.62 574.18 315.42 247.58 Profit After Tax 833.45 557.80 263.93 94.47 35.25

Results:

LATEST RESULTS (Rs in Cr.)

Particulars Quarter Ended Mar 08

Quarter Ended Mar 07

% Var Year Ended Mar 08

Year Ended Mar 07

%Var

Sales 322.43 189.83 69.9 980.66 588.96 66.5Other Income 15.55 17.93 -13.3 57.98 34.86 66.3PBIDT 155.26 124.55 24.7 574.18 315.42 82Interest 20.62 16.86 22.3 70.25 73.71 -4.7PBDT 134.64 107.69 25 503.93 241.71 108.5Depreciation -3.97 31.47 -- 95.54 73.96 29.2PBT 138.61 76.22 81.9 408.39 167.75 143.5Tax 47.26 4.04 1069.8 105.14 14.62 619.2Deferred Tax 27.66 59.35 -53.4 39.32 58.66 -33PAT 63.69 12.83 396.4 263.93 94.47 179.4

Trailing Quarter Results at a Glance:

QUARTERLY -RESULTS (Rs in Cr)

200712 200612 VAR % 200709 200609 VAR % 200706 200606 VAR % Net Sales 257.23 132.8 93.7 181.09 114.76 57.8 219.91 151.57 45.1Other Income 24.26 7.48 224.3 8.95 6.25 43.2 10.06 3.64 176.4PBIDT 171.87 56.5 204.2 104.47 49.91 109.3 142.6 84.45 68.9Interest 16.05 17.65 -9.1 16.69 19.3 -13.5 16.9 19.9 -15.1PBDT 155.82 38.85 301.1 87.78 30.61 186.8 125.7 64.55 94.7Depreciation 35.2 -16.98 307.3 31.62 13.09 141.6 32.69 46.38 -29.5Tax 34.5 5.96 478.9 0 2.15 0 23.01 2.1 995.7Fringe Ben Tax 0.13 -0.01 1400 0.12 0.25 -52 0.12 0.05 140Deferred Tax -7.26 -2.78 -161.2 14.28 -0.34 4300 4.64 2.43 90.9PAT 93.25 52.66 77.1 41.76 15.46 170.1 65.24 13.59 380.1



Recent News:

The company is looking for alliance on a partnership basis in South Africa, Bostwana and other coal rich countries of Africa to make the coal readily available to the power generating companies in India. At the same time GMDC is also planning to forge tie ups with parties in Pondicherry, Kerala, Delhi and Maharashtra in acquiring coal blocks for joint development and setting up power generation plants.

The company is planning to expedition into Cement, Power, SEZ and port

business, thereby leveraging its coal control capabilities. GMDC has planned to enter into cement and power business, through two different JVs, which will ensure a captive coal customer to the company in each venture. The company has entered into a JV with Jaiprakash Associates for setting up of a cement plant in Kutch with a scaled up capacity of 6 MTPA with an initial investment of around Rs 700 crores.

GMDC plans to provide power to the above mentioned cement plant through a

JV with the Gokul group. The company plans to form Gujarat Gokul Power Ltd to set up a 135-MW lignite-based power plant at Tadkeshwar in Surat district. This area has coal deposits to the tune of 350 lakh tonnes and would easily cater to the power plant requirement of 10 lakh tonnes per year. GMDC shall have 26% equity in the power company with a right to buy 75% power and allocate the same to the cement JV.

The company has been allotted two coal mine blocks of 350 MT and 250 MT in

Chattisgarh & Orissa, which are expected to be developed over the next 4 years. These mines will act as a feed for the power projects of 2750 MW and 1750 MW. GMDC is also in talks with PIPDC to mine the entire 500 MT Naini block allocated equally by the ministry to both the companies in 2007, as PIPDC does not have rich expertise in mining whereas, GMDC is an expert in the field, thereby looking forward to have better synergies and reap extreme benefit from the project.

GMDC is setting up 6 mtpa cement plant in joint venture with Jaiprakash

Associates in Gujarat. To power this cement plant, company would have another joint venture with Gokul Group (oilseed processing major) to set up 135 mw lignite-based power plant in Surat. While GMDC will have equity in both, the cement plant will have equity in the power plant. With captive power and cement plant, GMDC is leveraging its “coal control” capacity to turn it into components of infrastructure development, such as power, cement, etc.

Synopsis: Being the leading lignite merchant in the country, the company already stands in a pioneer position in the sky rocketing coal prices regime. With the allotment of coal blocks in Chattisgarh and Orissa, the company shall be able to feed 4750 MW power and if negotiations with PIPDC (Pondicherry Industrial Promotion and Development Corporation) prove fruitful (PIPDC does not have rich expertise in the mining sector. On the other hand, GMDC is one of the major mining and mineral companies having ample expertise in the field. It also plans to foray into power generation in a big way. GMDC's intention to mine the entire Naini block is aimed at having better synergies to get maximum benefits from the project. Also, the company’s diversification into cement, power, SEZ and port arena is expected to increase future earnings visibility by securing captive coal customers through the proposed JVs. The stock at the current market price of Rs 262/- trades at 15.78 times to it’s earning per share of Rs 16.60 and 3.92 times to its book value of Rs 66.77. The stock looks attractive at the current valuation with the strong upside potential in the long term investment horizon.

SURESH RATHI SECURITIES PVT LTD

Wealth Creator Thru Systematic Investment

KEY LOCATIONS

-: REGISTERED OFFICE :- Lalit Mundra

11 & 12 ‘A’ Mithila C.H.S. J.B.Nagar, Andheri (E), Mumbai – 400059. Tel: 022-28354000, 28216446 Fax: 022-28205533

Email: [email protected]

-: CORPORATE OFFICE :- Kailash Sarda

Mahesh Hostel Complex, Opp Bombay Motors, Chopasni Road, Jodhpur – 342003

Tel: 0291-2654000 Fax: 0291-2430913 Email: [email protected]

-: INSTITUTIONAL SALES :- Aashish Chitlangi

9, Parekh Vora Chambers, 66 N.M.Road, Fort, Mumbai – 400023. Tel: 022-22666178, 22691103 Fax: 022-56344007

Email: [email protected]

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