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To invest Rs 1,200 cr in plant’s revamp

Jayanta Mallick

Kolkata, June 27 Jaiprakash Group, the cement, infrastructure construction, power and real estate conglomerate, is making an entry into steel with an investment of Rs 1,407 crore.

Mr Suren Jain, Director (Corporate) of Jaiprakash Associate Ltd, told Business Line that the company had acquired Malvika Steel assets for Rs 207 crore and plans to invest Rs 1,200 crore on the “run down” plant, locate d at Jagdishpur in Uttar Pradesh’s Sultanpur district.

The Debt Recovery Tribunal (DRT) on Tuesday declared Jaiprakash Associate as the successful bidder. SAIL was the other bidder at the auction sale for the mortgaged property of Malvika, including land, buildings, plant and equipment. The asset transfer would be done free of any liability, Mr Jain clarified.

The company official said that the financing for the steel foray would be through a mix of internal resources and borrowings. It has so far paid 25 per cent of the consideration for the assets to DRT. “The rest would be paid within a fortnight,” the official added.

Mr Jain said the company has chalked out a plan to commission a 5.5 lakh tonne per annum pig iron facility at Jagdishpur by March 2009 and production of longs would begin by March 2010.

Mr Vinay Rai-controlled Usha group floated Malvika Steel in 1998-99. However, the proposed project ran into trouble and could not be implemented. Over the years, borrowing arrears piled up via-a-vis financial institutions. A consortium of institutions, led by IFCI, had taken over the management control of Malvika Steel in September 2001. DRT recently had placed Malvika Steel assets on auction.

The plant, which remained shut for about 8 years, has 739.65 acres of land. A Jaiprakash team would soon visit the location to start the reopening process.

The Jaiprakash group’s captive requirement of construction steel could largely be met by the revamped unit, company sources said.

More Stories on : Mergers & Acquisitions | Steel

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