JSW Steel, JSPL to bid for Stemcor's Indian assets

Companies promoted by Jindal brothers - JSW Steel and Jindal Steel and Power (JSPL) - will for the first time compete directly with each other as they prepare to bid for the Indian assets of UK-based Stemcor.

The two firms promoted by Sajjan (JSW) and Naveen (JSPL) will be the among the 9-10 parties interested in Stemcor's assets, estimated at $800 million.

Both the brothers, sons of late O P Jindal, have so far avoided venturing directly into each other's turf despite being major players of Indian steel industry.

Their product offerings as well as target markets are different. Sajjan Jindal's JSW Steel has bigger presence in Western and Southern India, while Naveen's JSPL has bigger presence in Eastern and Northern India.

JSW has 14.3 million tonne (MT) capacity, while JSPL is set to have about 6 MT capacity in the next few months.

"We are going to submit (the bid). It will be preliminary, and a non-binding bid," JSW Steel's Joint Managing Director and CFO Seshagiri Rao told reporters here on the sidelines of a CII conference.

Stemcor's assets are primarily in Odisha and make sense for JSW as it sources iron ore for its Dolvi plant near Mumbai from the eastern state only, Rao said, adding that the assets on the block are near by Dhamra port and bringing ore from there will not be "expensive".

A senior JSPL official also confirmed his firm's plans for putting the bid, saying that it will be conditional, seeking majority stake and management control of the assets.

"We have not yet submitted the bid but would do so in next 2-3 days. It will have certain conditions like securing a minimum of 51 per cent stake and management control of the properties," he said.

Stemcor has kept September 10 as the deadline for putting in the bid and is expected to auction the assets this month itself. Goldman Sachs is advising the British steel trading major for the asset sale.

The properties on the block are estimated to be worth $800 million and include a majority stake in a mining and trading firm, a minority stake in an operating iron ore mine and a firm having four million tonne per annum iron ore beneficiation plant.

The British trading major is in the process of restructuring debt and is selling off some of it assets globally, including India.

Several Indian steel companies, on the other hand, are struggling to secure long term iron ore sources and Stemcor's assets will help boost captive supplies.