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Bhubaneswar, Dec 19: JSW Techno Projects Management, has acquired 49 per cent stake in Odisha-based Brahmani River Pellets (BRPL) in a Rs1,000-crore-plus deal.
BRPL owns a four million tonne (mt) pellet plant, a 4.7mt beneficiation plant and a 230km slurry pipeline connecting the two. JSW Techno renders project management services, including management consultancy and advises on matters of finance, organisation, management, commencement or expansion, cost control and technical planning. It also undertakes strategic long-term investment. Currently, the company holds 9.5 per cent stake in JSW Steel.
Sources did not give reasons why the acquisition was being made through a promoter group company, instead of JSW Steel. JSW showed interest in BRPL after a Tata Steel takeover of the company failed.
Earlier, JSW Steel and other companies such as Jindal Steel & Power Ltd (JSPL), Essar Steel, and Aditya Birla Group-owned Essel Mining & Industries Ltd had made abortive attempts to buy out BRPL to gain access to its captive iron ore mines and strategically located pelletisation plant at Kalinganagar in Odisha’s Jajpur district. Three years ago, BRPL was valued at about $1 billion. But, its valuation has been falling as its captive mines have remained out of operation and due to the uncertainty surrounding the resumption of operations.
Brokerages feel the latest deal being routed through JSW Techno could be linked to the group buying another asset via the National Company Law Tribunal (NCLT) at a later date “If the JSW promoter manages to acquire an asset in NCLT, it would be via a joint venture (JV). Then, it makes more sense to keep this BRPL asset not linked to JSW Steel at present. Later, depending upon the outcome of the NCLT asset, decide under which business vertical it should be placed,” said a senior analyst, on condition of anonymity.
An inorganic growth route to build capacity is not new to JSW Group. In JSW Energy, the company acquired two hydropower plants from Jaiprakash Power Ventures. With installed steel-making capacity of 18 mt annually, JSW Group has presence in Maharashtra, Karnataka, Tamil Nadu and Punjab. A stake buy in BRPL will give the group’s steel business a needed presence in the east, where it is currently present through JSW Cement at Salboni in West Bengal.
