The battle between JSW Steel and the Vedanta group’s mining subsidiary, Sesa Goa, over acquisition of Bellary Steel has reached the Supreme Court.
The Delhi High Court had last week accepted Sesa Goa’s bid.
JSW Steel Vice-Chairman and Managing Director Sajjan Jindal told Business Standard the company had appealed against the Delhi High Court order in the Supreme Court. “We believe we have a strong and genuine case and will fight it out,” he said.
Earlier this month, the high court asked Sesa Goa and JSW Steel to re-bid. JSW Steel said it had got the company in an earlier round and concluded the contract with IFCI — Bellary Steel’s prime lender and the auctioner — and so did not bid. Sesa Goa offered Rs 220 crore. Hence, the high court decided in its favour.
The base price was Rs 205 crore. JSW bid Rs 210 crore. Sesa Goa bid Rs 206 crore in the first round. It did not comment on the latest development.
Seshagiri Rao, joint managing director and group CFO, JSW Steel, said, “Our technical point is conclusion of the deal and that they (IFCI) have given us the letter of acceptance. Therefore, technically we thought we had a case. Then, the court said if Sesa was willing to pay more, it would give it to them. The court order clearly says that if anyone is willing to pay more than Sesa, it can do so in 15 days.”
Bellary Steel’s 700-acre, 0.5 million-tonne (per year) half-built steel plant in Bellary is important for both JSW Steel and Sesa Goa. JSW Steel has its flagship seven-million-tonne plant in Bellary. Buying Bellary Steel will help it expand in the state.
| TIMELINE |
| December 31, 2010: IFCI invites bids for Bellary Steel. JSW Steel and Sesa Goa bid Rs 210 crore and Rs 206 crore, respectively. IFCI gives Bellary Steel to JSW as its bid is higher than Sesa Goa |
| January 2011: Sesa Goa approaches the Delhi High Court and gets a stay on the sale to JSW |
| March 2011: The Delhi High Court asks the two companies to bid again. JSW refuses. Sesa agrees and makes bids Rs 220 crore. The Delhi High Court rules in favour of Sesa Goa |
| March 2011: JSW Steel files an appeal in the Supreme Court against the Delhi High Court order |
Sesa Goa, on its part, has been suffering from the ban on iron ore export in Karnataka. The company sees in Bellary Steel an opportunity to set up a value-addition facility in Karnataka. This will allow it to export iron ore without any duty burden. In this year’s Budget, the finance minister imposed a 20 per cent export duty on iron ore lumps and fines and cut the duty on value-added iron ore and pellets to zero.
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P K Mukherjee, managing director, Sesa Goa, had earlier said, “We have been looking at setting up value-addition facilities, as desired by the state government, and this acquisition (Bellary Steel) provides us an excellent opportunity to leapfrog in that direction.”
JSW’s Rao, talking about what happened on the last day of the bid submission on December 31 last year, said, “IFCI called for bids and so they (Sesa Goa) submitted a bid and we submitted a bid. Our bid was higher. That’s when they (IFCI) said that JSW’s bid was higher and asked Sesa if it was interested. Sesa declined, and that is how we got the bid.”
According to the terms and conditions, JSW deposited 10 per cent amount initially and another 15 per cent the next day. “So, we got the possession of the property. Sesa Goa went to the court. The court did not go into the technicalities of the matter. It said public money is involved and so we have to get the maximum amount. It said if Sesa Goa pays more than the JSW’s Rs 210 crore, it is willing to consider. Sesa Goa agreed to pay Rs 215 crore, but we did not agree to pay more. Our point was that it’s a concluded contract. But the court refused. So, it reopened the issue and wanted us to rebid. We said we are not interested in rebidding.”