Wealth Creator Thru Systematic Investment

Suresh Rathi
R E P O RT 0 8 0 9 / 0 0 8
1 1 J U LY 2 0 0 8

Reporting-

Gujarat Mineral Development

Corporation Ltd.
Brown Gold….

9, Parekh Vora Chambers

66 N.M. Road, Fort
Mumbai - 400023

Phone: +91-22-22666178
Fax: +91-22-66344007
E-mail: rahulb@srspl.com
Suresh Rathi
 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
Stock Data of 24 months so as to bring down its holding in GMDC to 49%-51%. Gujarat Mineral
Nse Code GMDC Ltd 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
Bse Code 532181
largest seller of lignite, as most of NLC’s lignite production gets consumed captively for
Industry Mining
power generation. GMDC supplies lignite to various user industries including cement,
Face Value Rs: 2
textiles etc and has a much diversified mix industry and companies for supply, thereby
Reuters GMDC.BO
largely insulating itself from concentration on few user industries / clients.
Bloomberg GMDC IN
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
At A Glance and will fetch better realizations. Beside, company has also increased price of lignite
Equity (Rs Cr.) 31.80 w.e.f. Feb 2008. GMDC has been supplying important minerals like fluorspar to industries
Book Value 66.77 like steel, aluminum, refrigerants, foundries, etc., since 1968.
EPS 16.60
GMDC commenced with two projects, consisting of the silica sand crushing plant at
PE Ratio 15.80
Surajdeval in Saurashtra and the fluorspar project at Kadipani in Baroda district. In early
Market Cap (Rs Cr.) 4167.39
70's GMDC established the Bauxite Calcination Plant to start with its Bauxite operation in
52 Week High/Low 634/166
Saurashtra and Kutch.
Dividend Yield (%) 0..76
Last Dividend (%) 100% 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
Aashish Chitlangi Water Intake System, Desalination Plant, Fuel Oil Handling System, Cooling Water
Institutional Desk: System and Air Compressor System & Other Auxiliary Systems. The company has
inst@srspl.com completed the refectory dry out procedure of the Boiler Unit I lead to light up of the
+91-9820186491 Boiler by oil in 2004. The company has commissioned the 1st unit in September 2005
and 2nd Unit (in December 2005) three months thereafter.
Rahul Bhandawat
Research Desk: The company also set up a Alumina Plant in Kutch, Gujarat Alumina & Bauxite Ltd and
rahulb@srspl.com this project has got necessary approvals from the Government during 2004-05. Further
+91-9321413828 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

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.
Wealth Creator Thru Systematic Investment
Reporting….Gujarat Mineral Development Corporation Ltd.
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.
-2-

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.
Wealth Creator Thru Systematic Investment
Reporting….Gujarat Mineral Development Corporation Ltd.
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
-3-
 Reporting….Gujarat Mineral Development Corporation Ltd.

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

Wealth Creator Thru Systematic Investment -4-

 Reporting….Gujarat Mineral Development Corporation Ltd.

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

Metallurgical 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.

Wealth Creator Thru Systematic Investment -5-

 Reporting….Gujarat Mineral Development Corporation Ltd.

GMDC has been mining bauxite in

two centres for last two decades. OTHER
Average total bauxite output is PROJECTS
about 1,00,000 tones per year.

Bauxite
Gadhsisa Gadhshisha Ambaji Multi Akrimota
Group Of Calcination Metal Project Power Project
Mines In Kutch Project
& Bhatia Mines
In Jamnagar

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.

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.
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.
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

Wealth Creator Thru Systematic Investment -6-


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.
Wealth Creator Thru Systematic Investment
Reporting….Gujarat Mineral Development Corporation Ltd.
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.
-7-
 Reporting….Gujarat Mineral Development Corporation Ltd.

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.

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.
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

Wealth Creator Thru Systematic Investment -8-

 Reporting….Gujarat Mineral Development Corporation Ltd.

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

Public & Foreign

Institutions
Others 1%
12%
7% Non
Promoter
Corp. Hold.
Promoters 5%
75%

Financial Ratios:
The company is planning to foray
Ratios 0703
into Cement, Power, SEZ and port
business, thereby leveraging its Return on net worth (RONW) % 11.66
coal control capabilities. GMDC Return on capital employed (ROCE) % 13.45
has planned to enter into cement
and power business, through two Cash profit margin % 38.00
different JVs, which will ensure a Current Ratio % 1.38
captive coal customer to the
Debt Equity Ratio % 1.26
company in each venture.
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 53.73
Average Volume 248825 177459 133591 105934
NSE 262.85 -8.94 -17.10 -44.72 54.25
Average Volume 233351 183767 144613 114532

Profit % on Sales:
Financial Y-O-Y

12000.00
9807.57
10000.00

8000.00
The company has entered into a 5888.16
6000.00
JV with Jaiprakash Associates for 4323.98

setting up of a cement plant in 4000.00 2639.31

Kutch with a scaled up capacity of 2000.00

352.53
944.74

6 MTPA with an initial investment 0.00

2006 2007 2008
of around Rs 700 crores. Year

Sales Pat

Wealth Creator Thru Systematic Investment -9-

 Reporting….Gujarat Mineral Development Corporation Ltd.

Profit % on sales

30.00
26.91
25.00
20.00
16.04
15.00
8.15
10.00
5.00
0.00
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 Quarter Ended % Var Year Ended Year Ended %Var
Mar 08 Mar 07 Mar 08 Mar 07
Sales 322.43 189.83 69.9 980.66 588.96 66.5
Other Income 15.55 17.93 -13.3 57.98 34.86 66.3
PBIDT 155.26 124.55 24.7 574.18 315.42 82
Interest 20.62 16.86 22.3 70.25 73.71 -4.7
PBDT 134.64 107.69 25 503.93 241.71 108.5
Depreciation -3.97 31.47 -- 95.54 73.96 29.2
PBT 138.61 76.22 81.9 408.39 167.75 143.5
Tax 47.26 4.04 1069.8 105.14 14.62 619.2
Deferred Tax 27.66 59.35 -53.4 39.32 58.66 -33
PAT 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 45.1
Other Income 24.26 7.48 224.3 8.95 6.25 43.2 10.06 3.64 176.4
PBIDT 171.87 56.5 204.2 104.47 49.91 109.3 142.6 84.45 68.9
Interest 16.05 17.65 -9.1 16.69 19.3 -13.5 16.9 19.9 -15.1
PBDT 155.82 38.85 301.1 87.78 30.61 186.8 125.7 64.55 94.7
Depreciation 35.2 -16.98 307.3 31.62 13.09 141.6 32.69 46.38 -29.5
Tax 34.5 5.96 478.9 0 2.15 0 23.01 2.1 995.7
Fringe Ben Tax 0.13 -0.01 1400 0.12 0.25 -52 0.12 0.05 140
Deferred Tax -7.26 -2.78 -161.2 14.28 -0.34 4300 4.64 2.43 90.9
PAT 93.25 52.66 77.1 41.76 15.46 170.1 65.24 13.59 380.1

Wealth Creator Thru Systematic Investment - 10 -

 Reporting….Gujarat Mineral Development Corporation Ltd.

Recent News:

9 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.

9 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.

9 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.

9 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.

9 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.

Wealth Creator Thru Systematic Investment - 11 -

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Report Prepared by:

Rahul Bhandawat
Research Department

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Wealth Creator Thru Systematic Investment