Monday, July 14, 2014

Resurgere Mines and Minerals Ltd: Clarifications
It has come to my notice, some days back that some baseless rumors are being spread by vested interest groups, having some ulterior motives, in various message boards and discussion forums. I had earlier given my clarifications on the same, but it seems, the things are being stressed beyond tolerable limits. Below, I have tried to answer some of the most talked about questions, to the best of my abilities; after speaking with my sources. If you still have questions on this scrip, please do mail me at: suman2005s@rediffmail.com. 
Moreover, the difference of price of the scrip in the two exchanges, have probably confused the investors; who are finding it difficult to gauge the discovery rate of the scrip. It is natural that when a scrip trades with so much difference in two of the leading exchanges in India, the investors are bound, get perplexed. I had mentioned about problem, a number of times earlier in various forums including this blog, but unfortunately, it perhaps fell in the deaf years of the regulators. Hope the exchange authorities will soon, bring the price of the scrip, almost same, in the two trading platforms, by putting suitable circuit filters. Anyway, here is my take:  
Q.1. The CMD of the company Mr.Subhash  Sharma is drawing Rs.10 lakhs salary per month. 
Ans. Mr.Sharma is not taking any salary since the last one year, according to my sources. Moreover, the total employee cost for FY14, is shown to be only, Rs.62.56 lakhs. If Mr.Sharma had taken such high salary, then the amount would have been crores. Isn't it?

Q.2. The company does not have any mines. 
Ans. If the company is not carrying out any mining activity then from where Mine Development Expenses, shown in the result sheet, being written off as Rs.1137.76 lakhs came for the year ended 31st March, 2014 and Rs.2472.07 lakkhs occurred for the year ending 31st March, 2013? This will only come if the mining takes place, isn't it?

Q3. If the company had mandates to do mining, in Maharashtra, then why is the mining  not taking place now? 
Ans. Yes, the company do have the permission for mining in Mahalmiriya (Bauxite), Maharashtra. But Resurgere Mines and Minerals Ltd, has some problems with the lease agreement. According to my close sources, the company hopes to solve it at any time from now. However, mining can take place only post monsoon, which is natural in this business. This is also one of the reasons, why there is no mining taking place now. 

Q4. The company does not  have any Iron Ore mines.
Ans. The company has applied to the authorities to allow them to mine in  Satarda Mine, Maharashtra. The management hopes that with the new government taking lot of initiatives to revive the steel sector, such permission would be granted soon.  

Q5. Resurgere Mines and Minerals Ltd is a paper company with no sales and  no employees. No one knows what it does at present. 
Ans: Resurgere Mines & Minerals India Limited is a Public Limited Company engaged in the business of extraction, processing & sale of Ore and exploration & development of mining assets. Presently the Company is enjoying long term raising and purchasing rights for Bauxite Mine in the State of Maharashtra and mining rights for Soapstone in the State of Rajasthan. The Company has also 99.98 % equity holding in Shree Warana Minerals (India) Pvt. Ltd. having another bauxite mine in the State of Maharashtra through its wholly owned subsidiary i.e. Warana Minerals Private Limited.
It has an office in one of the prime locations in Mumbai (Bombay) and does have employees. However, since at present it is engaged in very small amount of mining, the company shed its employee strength; with an eye to save costs. When full scale mining will take place, which is probably after the monsoon, we could see an increase of employee head count. 

Q. Recently the promoters sold the shares of the company and made  money. 
Ans. The promoters did not sell any share, in contrast to one of the peer group companies, like SVC Resources Limited (Rs.2.48, Face Value: Re.1). If anything has been sold, it happened when pledged shares were invoked by the lenders.

Q. The company has no future, as the management, till now has failed to perform. 
Ans. The management, in order  to further their business, opened the followed subsidiary companies, but due to tight liquidity conditions it was not able fructify their idea. Subsidiary companies are: 
a. Warana Minerals Private Limited - Wholly owned Subsidiary Company.
b. Shri Warana Minerals (India) Private Limited - Subsidiary Company of Warana Minerals Private Limited.
c. Resurgere Sponge Iron Limited - Wholly owned Subsidiary Company.
d. Resurgere Ferro Alloys Limited - Wholly owned Subsidiary Company.
e. Resurgere Industries Limited - Wholly owned Subsidiary Company.
f. Resurgere International FZE - Wholly owned Subsidiary Company at UAE.
g. Resurgere Coal India LLP - Limited Liability Partnership Firm. 
In future the company hopes to start business in these companies too. With the present government taking, a balanced view of the mining sector; the things have started to look better again.  

Q. At Rs.2.28 the shares of the company are overvalued and should be exited.
Ans. The book value of the shares of the company is Rs.26.49, which is more than 10 times the current price of the scrip. It's share price fell from Rs.200 plus to the current rate. However, if the company is not closing down, then what is the need to sell the shares of the company, at this price, which is almost one fifth of its Face Value of Rs.10? Moreover, the market cap of the company is only Rs.45.34 Cr, which fell from Rs.1500 Cr in 2008. 
Therefore, when one is buying the stocks of such a company, it is given that there are inherent risks involved. If anyone is able to take such risks, they only should stay invested for high gains. This is a high-risk-high-gain scrip. 

Disclaimer: I hold a very small stake in the company, but many of the blog readers and followers, might have taken large positions, based on my recommendation. This clarification is basically for them; so that they do not get unnecessarily worried due to misinformation campaign, under-taken by a group of unscrupulous fellows. 
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