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Jindal readies bid for Salem, Alloy Steels

New Delhi, Sept 16: Stainless steel maker Jindal Strips is in the final stages of preparing a bid for Steel Authority of India’s Salem Steel Plant (SSP) and Alloy Steels Plant (ASP), Durgapur. It aims to submit its price bid and a business plan next week. “We are looking towards a joint venture in which we will hold a 76 per cent stake,” Jindal executives said adding that the firm is open to the idea of an outright purchase.

The business plan in addition to marketing and procurement strategies will include investment commitment for additional facilities at the Salem steel plant.

Sources said the price bid should be in the range of Rs 1,000-1,100 crore.

However, SAIL officials said the bidding conditions stipulated that the bidder should have 10 years’ experience in stainless steel making which the Jindals lack. This could prove to be a hurdle to government acceptance of the Jindal bid.

In fact, the only other bidder—the Tatas—have tied up with Arcelor to comply with this clause.

The terms of the global tenders floated earlier stipulated the bidder for SSP should have a net worth of more than Rs 500 crore with 10 years of stainless steel production. In addition, it should have investment plans to set up new facilities like steel melting shop or re-heating furnaces which requires an additional investment of more than Rs 700 crore.

When asked about the price bid, Arvind Parakh, director (finance), said, “We have sufficient resources to fund the acquisition and will explore all options to secure a majority stake.”

SAIL had offered the Jindals a takeover package by clubbing SSP and ASP together after the divestment programme in SSP turned out to be a one-horse race with Tata Steel-Arcelor dropping out and ASP unable to find any takers for its global tender floated last year.

Jindal Strips and the combined venture between Tata Steel and steel major Arcelor were the only two to be shortlisted after several bidders submitted their expression of interest for SSP about two years ago.

SAIL sources say that if disinvestment of SSP and ASP is unable to fetch them the right price it will have to be re-tendered.

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