L&T to take 3% stake in Jindal Vijayanagar Steel
Jindal Group
jindalsteel.org
Jindal Vijayanagar Steel
jindalsteel.org
L&T
larsentoubro.com
Domestic engineering-to-cements conglomerate Larsen & Toubro Ltd is planning to acquire a 3 per cent equity in the 1.6 million tonne Jindal Vijaynagar Steel Ltd located near Bellary in Karnataka.
JVSL is promoted by the OP Jindal group's Jindal Iron &Steel Company. This is the first time that L&T is proposing to pick up equity in a steel unit. The two companies are working out an instrument whereby L&T will pick up equity in lieu of Rs 65 crore owed by JVSL to the company. L&T is one of the major contractors for JVSL and has bagged a construction contract worth Rs 1,000 crore to set up the steel unit.
The two companies still have to work out details on the exact equity price for the 3 per cent equity of JVSL. According to analysts, L&T management had also hinted at the company's plan to pick up equity in JVSL.
Sources claim that JVSL have mooted the proposal to the L&T management as it was to in favour of paying the dues by raising debt. The company has a debt: equity ratio of 2.25:1. The company has invested around Rs 5,200 crore on the project, which includes a 500 MW captive power project, 3 million tonne pelletisation unit, a 2 million tonne iron ore mine in 1,500 acres. In JVSL's steel project, Karnataka State Industrial Development Corporation is also another equity partner with 10 per cent equity and is a co-promoter of this unit since 1994.
OP Jindal Group holds 38.22 per cent of the equity capital in a Rs 2,000 crore capital base. The promoters plan to hike their stake to 49.97 per cent through preference shares.
Sources say, L&T management is presently evaluating and discussing the entire proposal and a decision will be taken shortly. JVSL officials were not available for comment.
JVSL is the only Hot Rolled manufacturing unit in southern India with a market in Karnataka, Tamil Nadu, Andhra Pradesh and Kerala.
According to the proposal, the L&T has the option of selling the stake in JVSL either to the promoters or in the secondary market at a later date. Presently the JVSL scrip is hovering at around Rs 7 on the Bombay Stock Exchange.
Source : BS
Nov 4, 1999 |
