Jindal Steel to buy Oman firm for Rs 2,100 cr | business | Hindustan Times
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Jindal Steel to buy Oman firm for Rs 2,100 cr

business Updated: May 20, 2010 21:48 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Navin Jindal-led Jindal Steel & Power Ltd said on Thursday that it would acquire struggling Oman-based Shadeed Iron & Steel Co LLC for $464 million (nearly Rs 2,100 crore) in a deal that would give it a foothold in the West Asian market and also give it strategic advantage in its emerging focus on gas-based steel plants.

But some questions lingered on the potential of the purchase being executed through its Mauritius-based subsidiary.

Though the five-year-old company has strong potential, its 1.5 million-tonne hot direct reduced iron facility has been in the works for the last four years, raising doubts on its future. The plant is likely to be operational in a year with revenue expected to kick in by July-Sept 2011.

Shadeed is investing $500 million to install a gas-based hot briquetted iron plant with annual capacity of 1.5 million tonnes at Sohar in Oman, which is likely to be operational in a year with revenue expected to kick in by July-Sept 2011.

In a communication to stock exchanges, JSPL stated that a definitive share purchase agreement and other transaction documents have been signed, which include liabilities estimated at $79 million (Rs 355 crore). The company has tied up $400 million (Rs 1,800 crore) in debt financing from international banks and the balance will come from internal accruals.

"The acquisition will be our window to the Gulf which is a big construction market," said Sushil Maroo, director, JSPL.