HC clears Jisco-JVSL merger

The Bombay High Court today approved the merger between Jindal Iron & Steel Company (Jisco) and Jindal Vijaynagar Steel (JVSL).

As per the merger proposal, the steel business of Jisco is being merged with JVSL, while an investment company - Jindal South West Holdings - is being carved out of the existing Jisco. The merged entity, renamed as Jindal Iron & Steel Company, will result into a $1 billion integrated steel conglomerate.

The court order would be effected after the submission of the bank guarantee by Jisco. The company was asked to submit a bank guarantee for the ouststanding of Balli Klockener, which had filed a petition opposing the merger.

Seshagiri Rao, chief financial officer, Jisco, said, "The court today passed the order for the merger, which is effective, on the submission of the bank guarantee. The Balli Klockener counsel has agreed to the terms of the bank guarantee, which we will submit in next 2-3 days."

The court dismissed the application by the Income Tax department and the petition filed by Balli Klockener, opposing the merger.

Klockerner had filed a petition opposing the merger, claiming that Jisco had not settle outstanding dues amounting Rs 133 crore.

Jisco has proposed to give a 2-year bank guarantee, issued by the Punjab National Bank, in favour of the protho notary, in case the German trader is able to prove its claims through an arbitration process.

The Income-Tax department had filed an application for intervention in the merger stating that the tax liability of the merged entity is less by Rs 62 crore, compared with that of Jisco.

The court had rejected the application on the grounds that the IT department did not have any locus standi to file an application to opposing the merger and that there was no meriot in the application.