Widening reach

Mumbai, June 11: Sesa Goa Ltd, the iron ore mining company belonging to the Anil Agarwal group, today acquired VS Dempo & Co Pvt Ltd for Rs 1,750 crore.

The acquisition will give Sesa control over estimated iron ore reserves of 70 million tonnes in Goa.

Sesa Goa is already the country’s largest exporter of iron ore in the private sector. It has reserves of around 240 million tonnes.

The acquisition comes at a time when the global economy is showing signs of recovery and commodity prices, including steel, have started to rise. Iron ore is a key raw material in steel.

Sesa, a majority owned subsidiary of Anil Agarwal’s Vedanta Resources Plc, and the Dempo group announced today that they had signed a definitive share purchase agreement under which Sesa has acquired all the outstanding shares of VS Dempo.

VS Dempo, in turn, holds the entire equity of Dempo Mining Corporation Pvt Ltd and 50 per cent of the equity in Goa Maritime Pvt Ltd.

The Anil Agarwal group added that the acquisition was on a debt-free basis and the transaction had been funded out of Sesa’s existing cash resources. As on March 31, Sesa had cash resources of Rs 4,143 crore ($872 million).

VS Dempo’s Goa assets include processing plants, barges, jetties, transhippers and loading capacities at Mormugoa port. It produced 3.94 million tonnes of iron ore and sold 4.36 million tonnes in the year ended March 31.

Dempo has 19 mining leases spread over 1,800 hectares in Goa. The company has ventured into other states, including Maharashtra and Jharkhand.

“We are highly delighted with this opportunity to consolidate our iron ore business. The integration of Sesa and VS Dempo’s operations will achieve great synergy,” said Vedanta chairman Anil Agarwal.

Sesa said the acquisition of the Dempo group’s Goa mining assets was a logical and strategic fit with its existing iron ore business and was expected to create long-term value for all shareholders.