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Surana Industries signs JV with Agate Group

This article was posted on Jan 11, 2008 and is filed under Press Releases

Surana Industries limited, a part of the Rs 2,500 Surana Group has entered into a joint venture with Agate Group (MALAYSIA) for commencement of Coal Exploitation in Indonesia. Agate is engaged in the business of finance, foreign trade, mining industry, duty free retailing, consulting and technology in Malaysia, Singapore, India and Indonesia. They are entitled to enter into a partnership for development of coal mines as being acquired/leased out to them.

The arrangement is as follows:

1.They have already established a Company in Indonesia for this purpose. Surana Industries will be taking up 49% of the shareholding of that Company.

2.The Capital of the Indonesian Company will be around US $ 20.40 Million. Out of this 49% will be taken by Surana Industries which comes to roughly around US 10 Million viz around Rs.40 crores.

3.Total number of shares allotted By Surana Industries will be 8 lacs shares at the rate of Rs.500/- per share.

4.The Joint Venture Company will be managed by both Surana Industries Limited and Agate. They will obtain loans from local Banks for their working capital.

5.Out of the exploitation the Joint Venture Company will be entitled to sell 100% of the raised Coal.

6.Out of their total raising a minimum of 49% of the coal will be given to Surana Industries at the permissible price.

7.The price of coal to be sold to Suranas will be determined by the Pricing Formula announced by the Government and in terms of the local regulations in India.

8.The Coal will come to Chennai from an Indonesian port and then transported to Raichur by trucks or by Rail.

BENEFITS ACCRUED By SURANA INDUSTRIES ON THIS DEAL

The Company is fully assured of regular coal supply.In terms of the survey the Indonesian Coal from these Mines will have a Gross Caloric Value ranging from 6000 to 7000.The ash content in Coal is very much less ranging between 1.5 % to 10% only.The inherent moisture is around 6% to 10%.

The average cost of coal to Suranas will be around Rs.2800/ per ton as against the market price of coal at present around Rs.4000/- per ton. Thus the Company will be able to save around Rs.1200/- per ton.When Surana Industries shall be consuming around 5,00,000 tonnes of coal even if we take into account a cost reduction of Rs.1200/- per ton, the net savings will come around Rs.60 crores. This will add up to the Profits of the Company,Surana Industries has earlier projected a profit of around Rs.114 crores in the year 2009-2010. By adding this profit of Rs.60 croes the net profits of the Company will go up substantially.

This coal tie up is a wonderful opportunity for Surana Industries in as much while assuring regular supply of coal this will improve the profitability of the Company substantially. Incidentally, the Indonesian Company has a capacity to produce 1.2 Million tonnes of coal per annum. These also will be sold in the market after giving us the requisite amount of coal to us. The profits accrued to the Indonesian Company will also be shared between Agate and Suranas as per their shareholding.

Sourced From :Integral PR Services Pvt. Ltd

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