GMDC donates Rs 101-cr, raises funds from public

The donation doled out during 1992-93 and 1993-94 and 1994-95 amounted to Rs 6.25 crore, Rs 4.58 crore and Rs 11.26 crore. “The donations are given to build cancer hospital and other charitable purposes. We have a list of the recipients,” said a company spokesman.

“Further we have been getting tax benefit also from the donations. We could afford to give such donations as no other public sector unit is making profit as we do,” the spokesman said. GMDC which recently disinvested the government holding has given large donations in the past ostensibly for various welfare activities depressing its profitability.

This large amount of donation doled out by the management was the second major risk factor noted by the Securities and Exchange Board of India (SEBI) in the company’s public issue document. “It is the intention of the management to restrict donations in future to the limits with the discretion of the Board of Directors,” the company claimed.

According to the auditor report, the donations during 1995-96 even exceeded the manufacturing expenses which was only Rs 39.13 crore and even its net profit was less than the donation at Rs 39.05 crore during 1995-96. According to the company spokesman, “the profit before tax has increased from Rs 85.08 crore in 1995-96 to Rs 125.38 crore 1996-97 mainly due to the marked reduction in donations from Rs 48 crore to Rs 3 crore”.

GMDC was established by the Government of Gujarat in 1963 with the aim of developing important and major mineral resources of the state. Over the years the company has developed several mining centres based on continuous mining systems and benefication plants with the latest technologies.

The growth of the corporation essentially took off with the commencement of the lignite project in Panandhro in Kutch in 1974 and the opening of the second mine at Rajpardi in Bharuch district in the early 1980s. The company has a monopoly over the lignite reserves in Panandhro and Rajpardi of Gujarat.

The chairman of the company is Rameshbhai M Patel, sitting Member of Legislative Assembly (MLA), who is also an advocate and social worker. He was nominated and appointed by the state government in November 1996 as a director.

The day-to-day affairs of the company are managed by Managing Director Dr A W P David (IAS). The company is now planning huge capital expenditure including a power project and other diversifications. The money raised from the public will be utilised for this purpose.