Jindal Steel and Power has increased its holding in Gujarat NRE Coking Coal (GNCC) by 2.67 per cent to 12.74 per cent with an investment of Rs 43 crore. GNCC is the Australian subsidiary of Kolkata-based Gujarat NRE Coke.
The Naveen Jindal-owned firm Jindal Steel acquired 10.07 per cent in the Australian company for Rs 135 crore in May.
As part of the agreement, GNCC will issue and allot a further 30,000,000 fully paid ordinary shares to Jindal Steel and Power (Mauritius) at $0.25 a share raising A$7,500,000, the company said in a press release. The placement represents a premium of about 47 per cent to the current market price prevailing in the Australian Securities Exchange, it said.
GNCC also said it has finalised a further offtake agreement with Jindal Steel and Power, whereby Jindal would have the option to acquire an additional 200,000 tonnes of coal annually from the company at a benchmark linked market price, the release added.
The funds from the share sale would be used for expanding the capacity of two coking coal mines to six million tonnes a year.
“Securing strong off-take partners is important as we continue the expansion of our two mines to over six mt a year. The placement funds will be utilised in our expansion project,” said Arun Kumar Jagatramka, Executive Chairman, GNCC.
Jindal Steel & Power (Mauritius) is the Mauritius-based subsidiary of JSPL.
While acquiring stake in GNCC in May, Jindal Steel had also signed a long term contract to buy 5 million tonnes of coking coal over a 10-year period from GNCC. The company also has the option to increase its purchase further by an additional 5 lakh tonnes in a year.
Shares of Gujarat NRE closed unchanged at Rs 16.75 on the BSE, while the JSPL scrip was up one per cent at Rs 407.15 on Thursday.