JSW Steel to form subsidiary for Coal Assets, Steel Business

JSW Steel Ltd has announced that the Board of Directors of the Company at its meeting held on October 19, 2006, inter alia, has taken the following decision:

1. Formation of a wholly owned subsidiary for the purpose of investing in overseas Coal assets:

The company has been pursuing the strategy of integrating its operations vertically to bring down the costs. A focused effort is being made for the last two years to identify prospective coal mining assets and invest in them to ensure long term coal security. The company has identified certain coal assets in Mozambique and started financial, legal and technical due diligence. The Board has approved the opening of a new "arm" to pursue these initiatives by setting up a wholly owned subsidiary overseas with permission to form step down subsidiaries in various destination countries for acquiring the coal assets. The initial investment approved is up to US $ 25 Million to be contributed either by equity or loans / extension of financial guarantees.

2. Formation of a subsidiary to pursue acquisition opportunities in steel business:

The company has been on the look out for acquiring value added facilities in Europe and USA. The company has wide international presence with large exports, imports and foreign borrowings requiring a continuous interaction with various stake holders. To identify and to speed up acquisition of steel business related assets and also to intensify the interactions with various stake holders to improve its business activities in international arena, the Board has approved the formation of wholly owned subsidiary overseas with an investment up to £ 1 Million. This investment is by way of equity or loans / extension of financial guarantees.

3. Setting Up service Centre through wholly owned subsidiaries

The Company is setting up a manufacturing facility (1 MTPA CRM complex) to produce 0.8 MTPA of CRCA and 0.2 MTPA of HRPO products which will be operational by May 31, 2007.

Considering the requirements of discerning customers and long term strategic benefits and financial feasibility, the Board has approved the proposal for setting up a Service Centre at a cost of Rs 135 cores in a wholly owned subsidiary with an Equity Investment by the Company, upto an amount not exceeding Rs 50 crores in one or more tranches and also to give guarantee for a term loan of Rs 85 crores to be raised in the subsidiary company. The Service Centre, as a separate profit center, can over a period of time, take on and meet service requirements of the other Companies also.

Source : Equity Bulls

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