Mumbai: In the middle of a race to find a new majority owner, Sesa Goa Ltd, India’s biggest private iron-ore exporter, said the government’s plan to levy a tax on overseas sales of iron ore will lower profit.
Sesa Goa’s shares slumped for a second day.
Net income in fiscal 2007-08, will be reduced by Rs180 crore, said managing director P.K. Mukherjee in a phone interview. Sesa, which is 51% owned by Mitsui & Co., may post a Rs698 crore profit this year, according to a median estimate of seven analysts surveyed by Thomson Financial.
The tax may prompt companies vying for Mitsui’s holding in the miner to lower their bids, investor U.B. Bhat said. Arcelor Mittal, and Essel Mining, controlled by the Aditya Birla Group, are among bidders for the $760 million stake.
“The pressure to pay a huge premium has lessened,” said Bhat, a fund manager at Canbank Mutual Fund. “With the government order and the market turning negative, all the speculation about bidders paying 2,500 rupees will end.”
Sesa Goa shares slumped as much as 17% to Rs1,485, extending Wednesday’s 8.5 % drop.