Mittal to exit as V-C of JSW Ispat Steel

Vinod Mittal will step down as the executive vice-chairman of JSW Ispat Steel in the next three months.

Sources close to the development confirmed to Business Standard on Wednesday Mittal would resig by June from his post in the company, earlier called Ispat Industries. However, he, together with his brother Pramod Mittal, will continue to be on the board of the 1984-founded entity.

The company had signed an acquisition deal in December 2010, as per which Vinod Mittal were to cease being the executive vice-chairman of the company in 18 months. It also says he would subsequently take a non-executive vice-chairman role. However, that looks unlikely now. The two brothers will continue to hold as many board seats in the company and nothing more, according to sources.

In December 2010, JSW Steel bought 41.3 per cent stake in Ispat Industries for Rs 2,157 crore. Currently, JSW Steel holds 49.30 per cent share in the company. At that time, JSW had said Vinod Mittal would continue to be the executive vice-chairman for a period of 18 months to ensure smooth transition of the company towards JSW Steel. Pramod Mittal, then the chairman of Ispat Industries, had resigned from his position, making way for Sajjan Jindal as the chairman of JSW Ispat Steel.

Sources say the two will continue to be on the board after June, as they are not looking to exit the company. The Mittals currently hold over 20 per cent stake in JSW Ispat Steel. An official in the know of the development said the deal stipulated an 18-month period of Vinod Mittal’s vice-chairmanship and that is ending now. “So, he has to step down. As the two have a significant shareholding in the company, they will continue to be on the board but just as directors,” he added.

Email sent to Pramod remained unanswered. Vinod Mittal, too, did not respond to calls or messages.

JSW Steel is keen on merging JSW Ispat Steel with itself and the discussions to that effect are currently going on with the Mittals. JSW Steel Group’S CFO Seshagiri Rao, also the joint managing director, did not respond to queries. Officials say JSW is looking for ways to merge the two companies. “No decision has yet been taken on the merger. JSW Steel continues to be in talks with Mittals on the same,” he said.

Mittals are currently shown as the promoter and promoter group companies under the shareholding pattern details to the stock exchanges. As on December 31, 2011, the promoter and promoter group companies held 69.99 per cent stake in JSW Ispat Steel. JSW Steel holds 49.3 per cent, this means Mittals hold 20.69 per cent stake in JSW Ispat.

Email sent to Pramod remained unanswered. Vinod Mittal, too, did not respond to calls or messages.

JSW Steel had laid down a plan to revive Ispat in an 18-month period. The company had stressed on backward integration, like setting up of a coke oven battery, a pellet and a power plant. As late as last month, JSW Steel finally announced setting up of a coke oven plant, pellet and a cold rolling mill in JSW Ispat.

An analyst tracking the company said these investments were “imperative” for JSW Ispat to spring back to profits. “The commissioning of these projects won’t start before December 2013,” he said. “It means that the company is likely to suffer for sometime to come.”

The 1-million-tonne coke oven battery is expected to be commissioned in December 2013 and the 4-million-tonne pellet plant will come up in FY13-14.

In FY10-11, JSW Ispat posted a net loss of Rs 1805.88 crore. In the current fiscal, the company has already suffered a net loss of Rs 653.87 crore.