Gremach Infrastructure to acquire oil rigs

Gremach Infrastructure Equipments & Projects Ltd has informed that the Company proposes to acquire 40 nos oil & gas drilling rigs, 40 on-shores and 4 off-shores in a period of 3 to 4 yrs at an approximate cost of $ 1 Billion. in this connection, Gremach has proposed to tie-up with China's biggest Oil & Gas Rig manufacturer and has placed order for design and manufacture of quantity 4, 2000 HP VFD Oil & Gas Drilling Rigs on, BAOJI OILFIELD MACHINERY COMAPANY (BOMCO) owned by China National Petroleum Corporation (CNPC). The contract has an option to order another 36 Rigs. Formation of a Joint Venture between Bomco and Gremach is mooted wherein BOMCO could pick up equity stake upto 8% in its Singapore based SPV which would be world's first purely rental Company for Oil & Gas Drilling Rigs. This entity would be in a position to supply new state of the art Rigs to global customers, within much shorter delivery period in the face of endemic problem of long delivery period of Rigs experienced. Similar rental solutions already exist in Caterpillar and Volvo rentals.

The recent meeting between Gremach and high level BOMCO team represented at Vice President Level has put a seal to their deal for placement of order of qty 4 rigs with an option to buy 36 more over a period of coming 3 to 4 years and also to the proposal for a JV between the two Companies.

Gremach has incorporated a Singapore based SPV named Photogram Energy Pte Ltd. Gremach shall be making investment up to USD One Billion considering the vast global market potential in oil drilling business (subject to requisite RBI approval). This business proposal is considered highly profitable, with projected IRR 35% in the light of huge market demand for on shore and off shore drilling rigs considering unprecedented rise in crude prices. Infact, rig rental day rates for Off-Shore Rigs have risen by 13%, averaging to around $ 3 to 5 lacs per day. In the case of on shore rigs the payback period is estimated at 3 years. Several reputed Banks and other financial institutions have evinced keen interest to fund the above business Proposal / Acquisition.

Internationally, oil rig owners like NABORS (Source as seen from the Company's web sites) generate 25% profit. From its revenue of $ 4 B, its profit is $ 1 B. Another, US top drilling Company, PARKER, with revenue of $587 M, have also deployed BOMCO rigs similar to that ordered by Gremach. Trans Ocean have order book position of $ 21.4 Billion (approx). This order placement by Gremach shall enable it to become on of the largest land rig owner in the times to come out of India. Gremach had recently acquired 75% stake in a Mozambique Company having 11 prospecting licenses of Coal, aggregating 13520 Hectares, in prime region of Moatize.

Gremach Infrastructure Equipments & Projects

Gremach Infrastructure Equipments & Projects Ltd has announced that the Company has taken 75% controlling stake in 11 Coal mine licenses in Mozambique having an aggregate 13,520 hectares (appx. 13,52,00,000 sq. mts) in prime region of Moatize. This region falls in Karoo basin which is recognized as Prime Hard Coking coal bearing area in Africa. There is a global shortage and crisis of hard coking coal and this will add huge value to the profitability of the Company.

The Company has renamed out of above two licence no. 1165L as GRE Mine no 1 and 1100L as GRE Mine no. 2. The Company is planning to start prospecting of the area in the month of October, 2007 and will be complete by mid 2008. Expected reserves in the above mines are more than 200 million. With this acquisition, the Company has entered into the list of selected club of few Indian Companies like JSW, Tatas and Gujarat NRE Coke which has mines outside India.

These licenses have been purchased form a Mozambique Company viz. Osho Mozambique Coal Mining Limitada having registred office at Maputo.

Mr. Rishi Raj Agarwal, MD of the Company said "These 11 licences are very close to existing Companhia Vale do Rio Doce (CVRD) mines and few of them are having common boundary with CVRD licences where hard prime coking coal has already been found. These strategic acquisitions will make Gremach one of the most important players in prime hard coking coal mine in the world".

"To take advantage of government incentives, many Indian Companies are working bee-line in coal mining business in Mozambique. JSW group, Ispat Industries and Tata Steel have recently made acquisition of coal mines in Mozambique. Tata Steel has acquired 35 percent stake in Australian firm Riversdale Mining Ltd.'s Coal Project in Mozambique for Australian $ 100 million (about $85 million). Companhia Vale do Rio Doce (CVRD), the world's largest iron ore producer is investing a $2 billion in Mozqmbique that may develop the southern hemisphere's biggest mine for the black gold."

The Company's group Company Austral Coke & Projects Ltd. is into manufacturing of Low Ash Met Coke and this acquisition will give raw material security which is a normal practice in Australia where Japanese and Chinese have invested for in-house captive consumption.