Jindals Allowed To Shed Stake In Praxair

The Jindal Group has been permitted by the Foreign Investment Promotion Board (FIPB) to dilute their stake to 26 per cent in the joint venture with US industrial gas major Praxair to set up the oxygen unit of the Jindal Vijaynagar Steel plant.

Sajjan Jindal, vice-chairman of Jindal Vijaynagar Steel, told Business Standard that it was an enabling approval which allows the Jindals to dilute their stake in Jindal Praxair to 26 per cent, as and when required.

The portion of the equity diluted by the Jindals will, in that case, be picked up by the foreign partner, US major Praxair, whose stake in the joint venture will thus go up to 76 per cent, said Jindal.

This is similar to the permission which the Jindals had received earlier from the FIPB to dilute their stake to 26 per cent in the power project with Tractebel if such a need arose.

The total equity of the oxygen plant project stands at Rs 156 crore while the total project cost is Rs 410 crore.

The joint venture with Praxair is a 50:50 one, formed to set up two modules of 2,500 tonnes each capable of producing 5,000 tonnes of oxygen per day. It will also produce 70 tonnes of argon daily.

Jindal justified the decision saying that the steel business was the core area of business for the Jindals and logically we should be retaining majority stake in those businesses.

The production of oxygen and power is in the nature ancillary business and not our main focus. Thus, the decision to maintain a minority stake in those businesses, he said.

He, however, added that this did not mean that the Jindal group had gone back on its decision on the power project with Tractebel. He said the group has already identified power as a major business activity.