JSW Group firm to buy 49% equity in BRPL, Stemcor's India asset

JSW Techno Projects has signed a definitive agreement for buying a stake in BRPL

JSW Techno Projects Management Ltd, a JSW Group firm, has signed definitive agreements to acquire 49 per cent equity shares of Brahmani River Pellets Ltd (BRPL) from Aryan Mining & Trading Corporation Pvt Ltd (AMTC).

AMTC holds 100 per cent stake in BRPL, which is one of the assets of Stemcor India Ltd, the Indian arm of the UK-based and Oppenheimer-family controlled Stemcor Holdings Ltd. BRPL operates a four million tonnes per annum (mtpa) pellet plant at Jajpur, 4.7 mtpa iron ore beneficiation unit at Barbil, along with a 230-km slurry pipeline connecting the two units, all in Odisha. Stemcor India owns a majority stake in AMTC. 

"The acquisition is subject to the approval of the Competition Commission of India and other conditions precedent as set out in the definitive agreements," JSW Techno Projects Management Ltd Director Alok Meherotra informed in a filing with the BSE.

JSW Techno Projects Management Ltd, a company incorporated in May 2010, is owned by Sangita Jindal, the wife of JSW Group Chairman Sajjan Jindal. The company is tasked with rendering project management services, including management consultancy services, and to act as advisor inter alia in the matters relating to finance, organisation, management, commencement or expansion, cost control, technical know-how planning and development, and also to undertake strategic long-term investments activity.

The size of the deal is not known but market sources have pegged BRPL's enterprise valuation at Rs 1,000 crore.

JSW's buying interest in BRPL follows a failed takeover bid by Tata Steel.

In December 2016, Tata Steel had struck a deal to acquire 100 per cent equity in BRPL. The company felt the location of BRPL's assets was strategic to its Kalinganagar operations and had significant operational synergies to make the plant more competitive. However, Tata Steel terminated the pact in October this year citing that the transaction could not be completed within the long stop date due to non-fulfilment of certain conditions set by the sellers such as obtaining necessary regulatory approvals from the Reserve Bank of India (RBI), settlement of proceedings under Foreign Exchange Management (FEMA) Act by the Directorate of Enforcement, and approval from the Income Tax authorities.

Earlier, JSW Steel and other companies like Jindal Steel & Power Ltd (JSPL), Essar Steel, and Aditya Birla Group-owned Essel Mining & Industries Ltd had made abortive attempts to buyout BRPL to gain access to its captive iron ore mines and strategically located pelletisation plant at Kalinganagar in Odisha's Jajpur district, home to a cluster of steel projects owned by Tata Steel, Jindal Stainless Ltd, Visa Steel, Mesco Steel and others.

Three years back, BRPL was valued at around $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.