Calcutta, Feb. 20: Jindal Steel and Power Ltd (JSPL) has scooped up a 7 per cent stake in Gujarat NRE Coking Coal Ltd (GNCCL) in the last three days after the latter spurned a takeover offer citing low valuation.
The Naveen Jindal firm's stake in the coking coal miner is now over 26.75 per cent, up from the 19.46 per cent when it mounted the takeover bid on January 31.
The GNCCL board had unanimously asked its shareholders to reject the offer on February 13.
"The offer undervalues your company's shares and does not adequately reflect the firm's future prospects," Arun Kumar Jagatramka, executive chairman of GNCCL, wrote to the shareholders of the company listed on the Australian Securities Exchange (ASX).
However, the suggestion does not seem to have cut ice with a large section of the shareholders, who agreed to the selloff offer at Aus $0.20 apiece.
Gujarat NRE Coke, India's largest manufacturer of low ash metallurgical coke, is the majority owner of GNCCL with a 64.1 per cent share.
The JSPL offer is running from February 15 to March 15. The Jindals are offering Aus $0.20 a share valuing GNCCL at Aus $221.6 million, or Rs 1,200 crore.
While seeking the rejection of the Jindal offer, Jagatramka had said JSPL had bought the shares in Gujarat NRE Coking Coal at more than the takeover bid price of Aus $0.20. Incidentally, the stock today closed at Aus $0.20 on the ASX.
GNCCL is Jindal's second attempt to gain a foothold in Australia's coking coal mining sector. If it manages to woo the Jagatramka family, the Jindals will get access to coking coal assets to feed its expanded steel capacity in India.
Gujarat NRE, which already supplies coking coal to JSPL from its New South Wales mines, plans to double output to 5 million tonnes a year. The two mines of GNCCL are estimated to have reserves of 125 million tonnes.
JSPL has been in search of coking coal mines abroad as the domestic reserve of this crucial raw material used in steel making is limited.
The takeover battle comes months ahead of JSPL lighting up a 6-million-tonne plant at Angul in Odisha.
Apart from pursuing the bid for GNCCL, the Jindals are scouting for coking coal and iron ore assets in West Africa, Spain, Ukraine, Indonesia. The company hopes to seal at least two deals for ore and coal in the next 3-4 months.
At present, JSPL has a capacity of 3 million tonnes per annum at its Raigarh plant in Chhattisgarh.
The company, which also has a wire rod mill and a bar mill at Patratu in Jharkhand, has an ambitious plan to have a 20-million-tonne steel capacity by 2020.