Gujarat NRE chairman A.K. Jagatramka (right) with director Chinubhai Shah in Calcutta on Wednesday. A Telegraph picture.

Calcutta, Sept. 17: Gujarat NRE Coke plans to come up with a Rs 100-120 crore rights issue with differential voting rights (DVR) to ward off any takeover threat.

The company will issue one share for every 450 shares held at a price of Rs 1,000.

The Gujarat NRE stock closed at Rs 66.50, a new 52-week low, on the Bombay Stock Exchange today.

“I do not expect any ordinary shareholder to subscribe to the DVR issue. But the promoters will,” Arun K. Jagatramka, chairman and managing director of the company, said on the sidelines of the company’s 21st annual general meeting here today.

If no one subscribe to the issue apart from the promoters, Jagatramka expects his voting right to cross 51 per cent. “Even as my stake will not cross the halfway mark, our voting rights will because of this new class of shares,” he said.

Differential voting rights is a common practice in developed markets. Jagatramka said his move was inspired by Tata Motors, which had adopted the same tactic recently.

The DVR shares will rank equal to other classes of shares, excepting voting power.

The company is yet to decide how many votes each DVR shares will carry.

Jagatramka said the float would not lead to a significant dilution of equity, which will hurt other shareholders. At the same time, cash will be infused into the company.

“In a way, I am paying a control premium to secure my position,” he said, adding that Gujarat NRE could be a potential takeover target for steel companies.

The company is the largest independent coking coal manufacturer in India.

It has several coking coal mines in Australia.

Coking coal prices have shot up three times this year, hovering at $300 a tonne. Metcoke prices are ranging between $650 and $700 a tonne.

The prices are expected to remain firm in the near future, particularly in India as steel production is expected to increase in the country. This could make Gujarat NRE a prime acquisition target.

Over the last few years, the promoter holding in the company has come down to about 41 per cent from 71 per cent. But Jagatramka said promoters had not sold shares. The erosion has happened because of the conversion of foreign currency convertible bonds. He said promoters would also exercise the creeping acquisition route to shore up their holding.