JSW Steel to give free shares to the displaced

Amid a raging debate about the impact of land acquisition on those losing land, JSW Steel has announced a package that entails giving free shares to landholders who sell their land to JSW Bengal Steel, the company floated for the Rs 35,000 crore, 10 million tonne steel plant at Salboni in West Medinipur, around 200 km from Kolkata.

This is the first time that a company has announced that it will give shares to those losing land over and above a compensation package.

The Jindal package for Bengal will have three components: employment for at least one person per family losing land, compensation for land price (50 per cent in cash and 50 per cent annuity from Life Insurance Corporation) and free shares at par equivalent to the land price.

A trust, to be administered by the district magistrate or the West Bengal government, will be set up for the shares, which will have a lock-in period till the first phase of the plant is complete, which will be March 2011.

The West Bengal Industrial Development Corporation (WBIDC) has an 11 per cent stake in JSW Bengal Steel, with the balance held by JSW group.

Announcing the package at Writers' Buildings, the state secretariat, at a joint press briefing with West Bengal Chief Minister Buddhadeb Bhattacharjee, JSW Steel Vice-Chairman and Managing Director Sajjan Jindal said the idea was to make "land givers owners of the plant".

Endorsing the model of equity participation, Bhattacharjee said the state government would suggest it to other companies.

Around 740 families are expected to lose land, according to Jindal. The package is meant for private land owners who earn an income from cultivation.

Of the total area of 4,800 acres needed for the project, 450-500 acres is private land and the rest, government land.

Public hearing for environment clearance will begin in August and Jindal expects to have possession of the land 2-3 months after that.