Domestic engineering-to-cement conglomerate Larsen & Toubro (L&T) Ltd is planning to acquire a 3 per cent equity in the 1.6 million tonne Jindal Vijaynagar Steel Ltd (JVSL) located near Bellary in Karnataka.
JVSL is promoted by the OP Jindal group's Jindal Iron & Steel Company (Jisco).
This is the first time that L&T is proposing to pick up equity in a steel unit.
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The two companies are working out an instrument whereby L&T will pick up equity in lieu of the Rs 65 crore owed to it by JVSL. L&T is one of the major contractors for JVSL and has a construction contract worth Rs 1,000 crore to set up the steel unit.
L&T neither confirmed nor denied the development in response to a fax from Business Standard.
The two companies still have to work out details of the equity price. Sources said JVSL had mooted the idea to L&T as it was not in favour of paying the dues by raising debt. JVSL has a debt-equity ratio of 2.25:1.
The L&T management is reported to be evaluating the proposal. A decision is expected shortly.
JVSL has invested Rs 5,200 crore in the project that includes a 500 mw captive power plant, 3 million tonne pelletisation unit and a 2 million tonne iron