Calcutta, Jan. 31: Navin Jindal flagship Jindal Steel and Power (JSPL) today came up with an all-cash offer of Aus $221.61 million (about Rs 1,200 crore) to buy out Gujarat NRE Coking Coal, the Australian subsidiary of Calcutta-based Gujarat NRE Coke.
The deal, if it goes through, will help JSPL to take full control of two coking coal mines that Gujarat NRE has in Australia and meet raw material needs.
Gujarat NRE already supplies coking coal to JSPL from the New South Wales mines. Gujarat NRE Coke, which is majority owned by Arun Kumar Jagatramka, plans to double output to five million tonnes a year.
The two coking coal mines are estimated to have resources of 651mt.
JSPL has been in search of coking coal mines abroad as the geological reserve of this crucial raw material in steel making through the blast furnace route is limited in India. The company has ambitious plans to expand capacity four-fold in the next two years.
The company also produces power and is on the look out for thermal coal as well. It operates coal mines in South Africa and Mozambique. Navin Jindal bought Canada's CIC Energy Corp, which is developing a coal mine in Botswana, last year after a failed attempt by his brother Sajjan Jindal's JSW Steel.
At present, Gujarat NRE Coking Coal sells most of its output to its parent Gujarat NRE Coke Ltd at market price on arm's length terms.
Calcutta-based Gujarat NRE Coke, listed on the BSE and NSE, is the largest Indian manufacturer of metallurgical coke.
The Jindal offer of Aus $0.20 per share represents a premium of 5 per cent over the January 29 closing price of Gujarat NRE Coking Coal on the Australian Securities Exchange (ASX).
In a filing to the Aussie bourse, JSPL, which is already a minority shareholder in Gujarat NRE Coking Coal with a 19.48 per cent stake, said it was making the unconditional offer to all shareholders of the company
"The Aus $0.20 cash offer allows Gujarat NRE Coking Coal's shareholders to realise full and fair value of their shares in a volatile equity market. The offer represents an attractive premium of 5 per cent on the closing share price of Aus $0.19 on January 29," JSPL vice-chairman Vikrant Gujral said in a letter to Gujarat NRE Coking Coal shareholders.
Gujarat NRE Coking Coal's shares rose 7.89 per cent on the ASX to close at Aus $0.205 today.