Avoid short cuts for expanding biz in OZ: Gujarat NRE Coke.
4 Apr 2010 - Shantanu Nandan Sharma,ET Bureau www.economictimes.indiatimes.com
Six years ago, Gujarat NRE Coke had a tough call to make. Even after the due diligence was completed, it was not an easy choice to acquire an Australian mine which was abandoned by energy giants such as Shell and BHP Billiton.
But group chairman Arun Kumar Jagatramka and his team betted high on India's chance of becoming a high-growth economy which in turn would increase steel demand. The Indian company went ahead in striking a deal to acquire South Bulli Colliery in Australia which was later renamed NRE No 1 Colliery, making a mark Down Under. "It was my gut feeling that the Indian economy will grow, and I proceeded on the acquisitions. I am happy that my assumption was correct and today we are reaping the benefits," says Jagatramka.
No wonder, Gujarat NRE Coke continued its foray into Australia and New Zealand. The NRE Wongawilli Colliery, for example, was formed by the consolidation of NRE Avondale Colliery, acquired in 2005, and Elouera Colliery acquired in December 2007. Currently it holds strategic stakes in various companies in Australia and New Zealand such as Pike River Coal, Rey Resources and Pluton Resources.
For Mr Jagatramka, who frequently travels to his Australian mines, the high operational cost there is an issue, but the company has made every attempt to keep costs under check. "One challenge is that Australia is a high cost economy. We need to maintain our cost levels under control. A habit of cost saving, through small things like switching the lights and AC off while no one is in the room needs to be inculcated by setting examples," he says.
But Gujarat NRE Coke has successfully integrated it's operations with the local community in Australia, and is now supporting a basketball team, Wollongong Hawks. Significantly, over 95% of our staff employed in it's Australian operations are local Australians. "We have ensured that there is no discrimination between the Australian and Indian staff either in terms of salary, emoluments or work culture. We abide by the government norm of paying salary to our staff," says the chairman.
Any advice for those who are looking for expanding business in Down Under? "One should not use short cuts like employing Indians at lower wages (less than the approved wage rate) to control the wage bill. This would only create discrimination and unhealthy atmosphere fuelling anger against Indians," Mr Jagatramka says.
GNM Price at posting:
72.0¢ Sentiment: None Disclosure: Not Held
