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Business News/ Industry / Manufacturing/  Jindal Steel settles for 49% stake in Orissa’s Gopalpur Ports
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Jindal Steel settles for 49% stake in Orissa’s Gopalpur Ports

Gopalpur Ports is an equal joint venture between Sara International and Orissa Stevedores

Jindal Steel and Power, a part of the $15 billion diversified OP Jindal Group, had in 2012 agreed to buy the entire stake held by Sara International and a 10% stake from Orissa Stevedores in Gopalpur Ports for an undisclosed sum. Photo: Mint (Mint)Premium
Jindal Steel and Power, a part of the $15 billion diversified OP Jindal Group, had in 2012 agreed to buy the entire stake held by Sara International and a 10% stake from Orissa Stevedores in Gopalpur Ports for an undisclosed sum. Photo: Mint
(Mint)

Bangalore: Congress party lawmaker Naveen Jindal-led Jindal Steel and Power Ltd (JSPL) had to rework its plan to acquire a majority 60% stake in Gopalpur Ports Ltd and instead settle for 49% after the Orissa government rejected its proposal because the sale did not comply with terms of the contract.

Gopalpur Ports, the entity that is building a new port in Ganjam district, is an equal joint venture between Sara International Ltd and Orissa Stevedores Ltd. The firm was awarded the port project by the Orissa government in September 2006 for development and operations for an initial period of 30 years, extendable by another 20.

“The original promoters of Gopalpur Ports had applied to the government to induct Jindal Steel and Power as a 60% shareholder in the port company. But, according to the concession agreement signed between Gopalpur Ports and the state government, the original promoters of the port have to hold a 51% stake till three years after starting commercial operations. Since the proposal is not in line with the concession agreement, we have not granted permission for the stake sale as requested," said G. Mathivathanan, secretary, department of transport and commerce, Orissa government.

A concession agreement is a document that sets out the terms and conditions of a port contract.

According to the proposal, Jindal Steel and Power, a part of the $15 billion diversified OP Jindal Group, had in 2012 agreed to buy the entire stake held by Sara International and a 10% stake from Orissa Stevedores in Gopalpur Ports for an undisclosed sum.

The original promoters of Gopalpur Ports had requested the Orissa government to make an exemption from the lock-in period for their holding specified in the concession agreement to facilitate the stake sale.

“But this was not agreeable to the Orissa government," a spokesperson for Sara International said. “Accordingly, we had to amend the share purchase agreement with JSPL to reflect the sale of a 39% stake to them. Orissa Stevedores sold another 10% stake, making JSPL the single largest share-holder in Gopalpur Ports with a 49% stake. Based on the amended agreement, we have put in a revised application to the state government seeking its consent for the stake sale which is under process."

Sara International is a Noida, Uttar Pradesh-based company with interests in trading of minerals, steel, agricultural produce and textiles.

The new port is being developed with an investment of 2,000 crore in three phases with a capacity to load 40 million tonnes (mt) of cargo a year.

It will start commercial operations in April from one berth and add two more by June with a capacity to load 10 mt of cargo.

Gopalpur is the only port among at least 10 owned by the Orissa government that was awarded through a competitive bidding process.

Four others—Dhamra, Subarnarekha, Astaranga and Chudamani—were given to private companies through a so-called memorandum of understanding (MoU) route, a plan that had drawn flak from the Comptroller and Auditor General of India.

Mahimananda Mishra, managing director of Orissa Stevedores, could not be reached immediately for comment.

JSPL did not respond to an email sent on Monday seeking comment.

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Published: 13 Mar 2013, 07:21 PM IST
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