Arun Jagatramka – Aussie Mogul with a Desi Twist
When Arun Jagatramka took over Gujarat NRE in 1994 it was about to be liquidated and had a bank liability of more than Rs 20 crore. Since then he has not only rescued the company but has also acquired mines in Australia by pumping over 300 million dollars. NRE Coke is also the first Indian company to own and operate coal mines in Australia.
He now has plans to emerge as one of the largest coking coal producers in Australia over the next few years when production would cross 6 million tonnes a year by 2012.
The stock price of your company in BSE nosedived to Rs 37.65 a share from Rs 76.2 per share a month ago and have been hit here as well. Do you think the markets are wrong in evaluating you?
I would not say markets are wrong or right.
Market price is a function of supply and demand and valuations, which are based on investor perceptions, which keep on changing with time. In our case, liquidity in the stock is low as up to 85% is held by parent company and 8-10% by institutions and 2-3% held by Indian shareholders. Australian script has fallen less than Indian script. Given the potential of the mine none of the biggest institutions have not liquated their stock. Individual shareholders are still making money compared to a year back. So to balance their books as they have made losses elsewhere, some of them have sold these shares. The sector itself is in an excellent shape. This port (Kembla) has never waiting a vessel till here. But last week I saw 6 vessels and they were just waiting for the cargo (coal). That tells you that the surplus in the coal sector is not there.
In BSE price has been beaten because most of the FIIs had liquidity problems and they had to liquidate and sell and could not find buyers in this type of market.
In Australian mines here we have the advantage of Australian dollar gone down and our realisations have gone up as we are 100% export unit here. All our costs are in Aussie dollars while revenues are in USA dollars.
There seems to be reports that you have hit with regulatory red tape. Are you happy with the speed of the regulatory approvals and will you continue post 2010?
I don’t think that there is regulatory red tape in Australia. Coming from India I can see the difference in what you call red tape and what you call systems. There are no regulatory hurdles. The NRE No 1 mine lease was renewed 2 years back and it is running for 18 years or so. Ellora mine is due for renewal and we are going for new lease and we don’t see any issues.
There is no regulatory hurdle but it is a change in the planning law of NSW. In 2005 all existing mines were bought under Dept of Planning for development perspective and in the next 5 years all the mines have to get fully compliant under the new planning law. By Aug 2010 that phase will be done. All the mines are in the same boat.
India is very resource rich and there is a need for innovative mining expertise. Do you think Indian mining companies are to modernising the mining sector and utilise the best available MTS (mining technology and services) which Australia has plenty to offer. What is the take up of Australian technology by the Indian mining industry?
I am very positive on the potential for the technology from Australia for use in mining scenarios in India and there have been efforts and some positive actions and results as well. Australia has a lot to offer and India has large potential and available resources in India can be better mined using this technology. Australian companies are active and going regularly for offering technology and are also doing tie ups and going forward you will see more to come.
Twelve months ago this colliery was closed with a bleak future and you performed a miracle. How did you perform this miracle?
My belief that this place had a future. It was 3 years back and at that time we were planning a new project. Most of the previous owners had less cash. Nobody was thinking. Most of the previous owners were thinking of making money just out of current year cash flow and running away from it. They were not interested reinvest this money for future development of the mine. Which is what we have done? During the last 1 and half year the entire work force has got confidence back that yes we are on track. Today we are in the process of developing this mine as well as other one in Wongawilli. These are world class hard coking mines Advantage that we have and I could see that myself being a coal consumer as well as a coal producer that the coal quality we have here is the best in the world. It comes in the Top 10% bracket in the total coking coal available in the export market. As a customer other than myself. You don’t have a 21-22% VM pure premium hard coking coal with a MMR 1.2 or 1.24 % anywhere in the world. Whatever else we hard coking coal, I would rate it as lower than this coal. And this you can understand only if you are using coking coal for coke making.
Most of the steel people are not into coke making directly. They see it as a source of coke but not knowing exactly what they need. Very few people are able to distinguish between this mine and mines in Hunter Valley. The difference is like 24% carat gold and 14% carat gold. Wongavelli the third mine is 24 carat gold. People don’t like it because you can’t use 24 carat gold for ornament making. If there is a khot then only it can be used for ornaments. Its unbelievable quality. If you have such unbelievable quantity of coal with you. That’s why I had faith. If you have a resource of good quality then technology can take care of rest of the problems. We have certainly benefited from this.
With the global slowdown what will be the effect of this on your mines here in Australia. Do you think there will be a significant price correction is possible in the year ahead?
Honestly I don’t see any cause for price correction. Coking coal supply remains tight. Depending on financial crisis that we have, there could be some price correction. But let me tell you whatever price correction we have, it will be a very short term phenomenon because ultimately demand far outstrips supply, particularly for hard coking coal as there is very limited supply and from places like India I don’t expect a negative growth for steel. The growth rate may come down from the 20% year on year demand in the last 3 years and it may come down slightly. The demand for coking coal from India will remain robust. From Japan which is another major market for Australian coking coal we don’t see any cutback in demand for coking coal or steel. And given the strength in these 2 major markets of Australian coking coal I don’t see any major setback for them.
Do you think other Indian companies will be attracted to the Australian market given that it has 60% of coal in the world?
Most of them are sincerely trying. But given the good fortunes in the mining industry in the last 3-4 years it has not been an easy task for them, particularly the good coking coal mines are very hard to find.
You have been chosen by the State Government to be an ambassador in India? What success have you achieved in this field and in getting this investment into Australia?
We are supposed to become a brand ambassador to promote Sydney as a brand and I am happy to be in that role as Sydney doesn’t need promotion. It is on auto promotion. Sydney has a lot to offer for tourism. Being in Southern hemisphere particularly because of night flight ban in Sydney it misses on world tourism and we are promoting. Last year we had put up a stall in one of the conference in Calcutta to promote Sydney. We are doing this again in Calcutta.
There are a lot of Indian students who try very hard to get jobs. Are you in a position to help some of them?
We have almost 8-10 Indian students here in Accounts as well as engineering students from the local universities and I am in a position to absorb more of them. They can send an email to us and approach us through our website.
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