Bangalore: Jindal Steel and Power Ltd (JSPL) is set to buy a majority 60% stake in Gopalpur Ports Ltd, the company building a new port at Gopalpur in Orissa, as it looks for a maritime gateway to ship the raw materials required for its steel and power plant coming up in India’s eastern state.
The value of the deal could not be ascertained.
The move will mark JSPL’s entry into the ports sector.
Gopalpur port is being developed with an investment of over Rs 2,000 crore in three phases with a capacity to load 40 million tonnes (mt) of cargo a year.
JSPL, part of the $15 billion diversified O.P. Jindal Group, will buy the stake from Sara International Ltd and Orissa Stevedores Ltd, the original promoters of Gopalpur Ports.
The equal joint venture between Sara International and Orissa Stevedores had been awarded the port project by the Orissa government in September 2006 for development and operations for an initial period of 30 years and extendable by another 20 years.
“The deal is on,” said D.P. Singh, managing director of Sara International, a Noida-based firm with interests in trading minerals, steel, agricultural produce and textiles. Singh is also the chairman of Gopalpur Ports. “We have signed a memorandum of understanding with JSPL to sell our 50% stake in Gopalpur Ports. The share purchase agreement has not been signed as yet. This will happen by end of February or early March,” he said in a phone interview from Delhi on Tuesday.
JSPL will also buy another 10% stake from Orissa Stevedores, Singh added. After the deal, Gopalpur Ports will be 60% owned by JSPL and 40% by Orissa Stevedores.
The first phase of the port, build at a cost of Rs 1,250 crore with a capacity to load 10 mt of cargo, will start operations in March 2013.
Gopalpur Ports has tied up a Rs 848.78 crore loan from a consortium of 11 banks, led by Punjab National Bank, to build the port. “The port project has secured all the required permissions, including the key environment clearance for take off,” Singh said. “We have taken possession of about 700 acres of land and are looking for more.”
Sara International has “decided to focus on our core areas of textiles, trading, mining and shipping”, Singh said. “Ports are long-gestation projects and we thought it was better to bring in somebody bigger to take the project to its logical conclusion.”
Manmohan Moharana, director (operations) at Gopalpur Ports, also confirmed the stake sale.
Both Singh and Moharana declined to give the financial details of the transaction.
Mahimananda Mishra, managing director of Orissa Stevedores, could not be immediately reached for comment.
Sushil Maroo, spokesperson and group chief financial officer of JSPL, was also not available for comment.
For JSPL, promoted by Naveen Jindal, a member of Parliament, the acquisition provides synergy. The firm with interests in steel, mining, power and infrastructure, plans to invest Rs 50,000 crore to set up a 12.5 mt integrated steel plant and a 2,600 megawatts captive power plant in Orissa in phases.
JSPL is also investing close to Rs 45,000 crore in the state to produce an estimated 80,000 barrels per day, or 4 mt per year, of crude oil using environment-friendly indirect coal liquefaction technology.
“All these will require huge inward and outward movement of cargo, which can be facilitated through the port. JSPL’s in-house cargo will also provide assured traffic to Gopalpur port,” Singh said.