INDIA BUSINESS WORLD - 1^st August 31^st 2008

AUSTRAL COKE FILES 600CR DEFAMATION SUIT AGAINST GUJARAT NRE COKE

Austral Coke has filed Rs 600-crore defamation suit against the promoters Gujarat NRE in the Bombay High Court, for maligning Austral Coke’s ongoing initial public offer.

The defamation suit was filed on the grounds that Gujarat NRE has been issuing false state ments at a time when Austral Coke's IPO is open. The offer opened for subscription on August 7 and will close on August 13. Austral Coke and Gujarat NRE are involved in a war of words regarding the structure and production capacity of Austral Coke. While Gujarat NRE MD Arun Jagatramka claims that Austral Coke inflated capacity and hence misled investors, Austral Coke MD Rishi Raj Agarwal says that an ongoing family dispute regarding ownership of Gujarat NRE has prompted Mr Jagatramka to work towards failure of the IPO of Austral Coke.

The promoters of both companies are part of the same family. Mr R L Tamakhuwala, the chairman of Austral Coke is the brotherin-law of Mr Jagatramka. "There is also a contempt of court against Mr Jagatramka for violating an earlier court directive on restraining from issuing defamatory press statements about Austral Coke," Mr Agarwal said. When the IPO of Austral Coke opened for subscription, Gujarat NRE said Austral Coke had misrepresented facts in its prospectus by saying that the total capacity of Austral was 375,000 tonnes, when according to Gujarat NRE, the actual capacity of Austral was about 70,000 tonnes. Mr Agarwal said his company's prospectus filed with Sebi clearly says that Austral Coke's capacity is 175,830 tonnes. “We have subsequently done an expansion that will take the total capacity to 375,000 tonnes," he said. Mr Agarwal said that while the draft red herring prospectus was filed with Sebi almost a year back, the company has embarked on an expansion since then that would raise the capacity to 375,000 tonnes. "Number of chimneys in a coke oven plant is no indication of the capacity of the plant. Different technologies can use different processes and number of chimneys cannot be used as a measure to calculate capacity," said Mr Agarwal. Gujarat NRE had said that since Austral Coke has only two chimneys its capacity could be about 70,000 tonnes, based on the industry benchmark that one chimney indicates a capacity of slightly more than 30,000 tonnes. On the second day of the IPO, Austral Coke received bids for 1.32 times the shares on offer, with most bids coming from non-institutional investors.