Goa firm says it will strengthen its presence in mining business
The Goa-based Dempo group, which sold its mining assets to Sesa Goa yesterday, is not severing its ties with iron ore mining, its traditional business since 1941.
For Shrinivas Dempo, the chairman of Dempo group, the sale of the Goa assets to London-listed Vedanta group’s subsidiary, Sesa Goa, is part of a larger plan in the mining sector that includes acquisition of overseas iron ore assets. The group plans to invest around Rs 500 crore for developing its mines at Sindhudurg in Maharashtra.
It is also eyeing assets in Indonesia, Australia and Africa, said people close to the company. On a standalone basis, the size of the asset in Goa was nominal and therefore the group felt it prudent to monetise this to focus on larger mining assets elsewhere, both within the country and overseas, they added.
The primary focus within the country is on Sindhudurg, where development is underway and production is expected in three to five years. During this period, the group requires an investment of Rs 500 crore for making it one of the major streams of revenue.
After signing the deal on Thursday, Dempo said “We are exiting from the Goan mining industry, but we will remain in the mining business by expanding globally.” The deal inked with Sesa Goa includes mining leases, mining rights and related infrastructure in Goa.
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The Dempo group has also embarked on a restructuring of its businesses in calcined petroleum coke, pig iron, shipbuilding, food, travel and media, football and education. The sale of V S Dempo & Company Pvt Ltd, established by the grandfather of Shrinivas Dempo in 1941, to Sesa Goa is also part of the restructuring process planned by the young chairman.
Goa Carbon, the only publicly listed entity from the Dempo family, has drawn up a major expansion plan to emerge as a major manufacturer of calcined petroleum coke (CPC). The company is setting up a CPC plant on the eastern coast with an investment of Rs 500 crore. It also plans to spend another Rs 100 crore to raise the capacity of its existing plant in Paradip, in addition to its plans to invest another Rs 100 crore in building power plants.
Analysts predict that even after the asset selloff, the Dempo family will associate with some of the activities at the mine, through logistics and shipping supports.