Calcutta, April 30: JSW Steel has acquired a steel service centre company in the UK for £3.75 million, or Rs 31 crore.
The company — Argent Independent Steel — has an annual processing capacity of 150,000 tonnes at Newport in South Wales.
Sajjan Jindal, vice-chairman and managing director of JSW Steel, said the acquisition would enable the Indian company to reach customers in the developed market faster.
“We will send finished steel from India to the UK to be tailor made for customers there. We hope to gain from this experience and set up similar centres across Europe,” Jindal told The Telegraph.
The UK-based company is involved in slitting, blanking and recoiling processes of steel products and caters to the automotive and construction sectors. The turnover of the company in 2006 was £26.3 million, or Rs 216 crore. The consideration of £3.75 million includes an existing loan of £2.1 million. JSW Steel proposes to fund the cost of acquisition from its cash accruals.
Coal mine allotment
JSW Steel has been allotted the Rohne coal block in Jharkhand with two other companies. JSW Steel will have a 69 per cent share in the block, which has recoverable reserves of 250 million tonnes of medium and high-grade coking coal.
Jindal said mining would start in two to three years, bringing down the company’s raw material cost. The coal block comes at a time when JSW Steel is expanding capacity from 3.8 mt to 6.8 mt by 2009 and to 10 mt by 2010.
JSW will spend Rs 7,000 crore to reach 10 mt capacity from 6.8 mt. While Rs 2,000 crore will come from cash accruals, the balance will be raised via various debt instruments like foreign currency convertible bonds (FCCBs), euro bonds and rupee loans.
The company is in talks with merchant bankers to work out the right mix of debt to finance its projects. The board today authorised the finance committee of directors to finalise the terms and conditions for each element of debt financing, including FCCBs.
Meanwhile, the company’s fourth-quarter net sales grew 57 per cent to Rs 2,498 crore. The company has posted a highest ever net profit of Rs 413.25 crore (Rs 410.68 crore).
The full year net profit stood at Rs 1,292 crore compared to Rs 856.53 crore in the previous year.