The funds, once approved by the institutions, will be mopped up through a private placement during during the current fiscal. It is believed that the size of the issue could be around Rs 200 crore.

The proposed private placement is expected to cover the Rs 163 crore call-in-arrears shortfall from its Rs 635 crore non-convertible debenture issue of 1995.

The promoters have 45 per cent stake in the company, while financial institutions hold 25 per cent with the balance 30 per cent held by the public. The total equity capital of the company has been increased to Rs 1,500 crore from Rs 1,200 crore in revised funding proposal submitted with the FIs.

"Negotiations with leading electrical and power equipment suppliers are at an advance stage and a decision to this effect will be takenafter the company's forthcoming annual general meeting in September," JVSL managing director Sajjan Jindal told The Financial Express.

Explaining the rationale behind offering of stake to suppliers, Jindal said: "This will improve the commitment of vendors towards the company. In turn the vendors will also gain in the long run in line with our expansion and increased volumes," he added.

The price at which the company's vendors like electrical and power equipment suppliers would acquire the shares will be decided on the existing Sebi guidelines on private placement.

On Monday the Jindal Vijayanagar Steel scrip touched Rs 8.25 crossing the 52-week high of Rs 8 on the Bombay Stock Exchange. Against an opening of Rs 5.85, the closing price of the scrip at the bourse was Rs 8.10, while the volume traded was 4.72 lakhs. Its 52-week low price is Rs 2 a share.

Analysts said the commodity scrip along with other steel shares should go up within the next few months subject to the demand in overseasmarkets. There has been a spurt in demand from South Korea and other countries of South East Asia.

"There is no need for any further panicking at these counters as the sales volume of white goods, freight container and automobile companies has been improving over the last few quarters. This, in turn, should enhance the bottomlines of JVSL," a Bangalore Stock Exchange brocker said.

Rao joins board

MVS Seshagiri Rao, the chief financial officer of JVSL, has been inducted into the board of directors of the company as its finance director. JVSL is also planning to enter into a tie-up with NSDL to demat the company's shares at the bourses. For the purpose, the company is seeking shareholders' approval at its AGM to be held at Toranagallu in Bellary. At present the company has 1.2 million shareholders.