New Delhi: Jindal Steel & Power is examining about two dozen proposals to buy power projects that have acquired land and government licenses to accelerate expansion, a senior executive said.

Jindal Power, a unit of Jindal Steel, whose 7,200 crore initial public offering (IPO) plans have been delayed due to rocky market conditions, recently placed newspaper advertisements seeking to buy projects of above 1000 megawatts.

A file photo of Jindal Steel in Hisar, Haryana.

Delay in land acquisition and obtaining environmental clearances have stalled several large projects in India including a proposed $12 billion steel mill by Korea’s Posco. A recently proposed new land bill, intended to overhaul the archaic law, falls far short of companies’ expectations, who say it favors rural landowners and will slow development and capacity expansion.

The talks with project owners are in the initial stages and some decision on purchase will be taken within 6 months, Maroo said, without specifying how many deals Jindal Power was looking at firming up. The company will fund the purchase through internal resources and debt, Maroo said. “For projects at that stage, not much fund is needed."

Jindal Power has 1,000 mw of operational capacity and plans to add about 4,400 mw thermal and 6,100 mw hydro power project.

A decision on refiling for IPO for the power unit will be taken in six months, Maroo said. The company exhausted its regulatory window in May to launch the share sale. Indian shares have lost nearly a fifth this year, forcing many firms to delay their share sale plans.

Steel prices to remain firm

Domestic steel prices will remain firm for the next six months as a weakening rupee was making raw material as well as imported steel expensive, Maroo said, without specifying if the company planned to raise prices.

Jindal Steel expects merchant power tariff, which is currently in the range of 3.75 - 4.25 a unit to firm up in the coming months as coal cost has gone up on a weak rupee. The rupee has lost about 9% against the dollar in the September-quarter, its largest quarterly fall since the same period in 2008.

In the April-June quarter, steel contributed about 85% to the Jindal Steel’s revenue and 75% to its profits with power accounting for the balance.

Lower availability of iron ore was also affecting the production of steel in the country, Maroo said.

An order by India’a apex court restricting mining of iron ore in Bellary district of Karnataka has drastically reduced raw material supplies to some steel firms, including India’s number three steelmaker, JSW Steel, that has been forced to cut its output to 30 percent at its 10-million-tonne Vijayanagar plant.

Shares in Jindal Steel, valued at about $10 billion, has lost about a quarter in value this year. At 03.01 pm, shares were trading down 3.5% at 503.55 in a Mumbai market that was down 1.37%.