Sajjan Jindal promoted JSW Steel is planning to acquire a 300 mw power plant from its group company JSW Energy (Vijayanagar) Ltd (JSWEVL) and has appointed Price Waterhouse Coopers to do a valuation and recommend an efficient mode of acquisition and the value at which the plant can be bought.
The steel major currently has captive power plants aggregating to 230 mw that suffices its requirement for the 3.8 million tonne plant. In order to meet incremental requirement of power for its ongoing expansion from 3.8 million tonne to 6.8 million tonne, the company has now decided to acquire the 300 MW power plant.
“We will not be in a position to talk about how much it will cost us before PWC completes its due diligence and gives us an independent valuation,” said Seshagiri Rao, director – finance, JSW Steel, told FE on the sidelines of a press conference in Mumbai.
The integration of entire power plant operations with steel plant operations will provide better control and management of power requirement within the steel plant complex; improve operational efficiency; and allow the company to avail potential tax savings due to tax concessions.
“Cost savings on the account of power and iron ore after our beneficiation plant is in place, will allow the company to avail cost savings upto 5-7% approximately, said Sajjan Jindal, vice-chairman and managing director, JSW Steel.
The company also proposes to get into joint venture agreements with mining companies to jointly invest Rs 1,000 crore to increase the capacity of its beneficiation plant, that converts low grade iron ore to a higher grade. The company’s beneficiation plant currently has a capacity of 3 million tonne. To meet its complete requirement by 2010, when its steel capcity increases to 10 million tonne, it requires a beneficiation plant with a capacity of 20 million tonne.
…to raise $500 m from overseas markets
JSW Steel announced that it will raise $500 million (Rs 2,013 crore) from overseas market through issue of securities. In a statement to the Bombay Stock Exchange, the company said that at the annual general meeting (AGM), the shareholders have approved the proposal to raise the amount through the issue of Foreign currency convertible bonds (FCCBs), global depository receipts (GDRs) or other securities which would be converted into equity shares later. The meeting also authorised the board of directors to raise another Rs 1,000 crore through issue of equity shares or securities to qualified institutional buyers (QIB) as permitted under the Sebi guidelines.