Jindal may buy Reddys' dream steel project

Jindal may buy Reddys' dream steel project

Brahmani Steels has 11,700 acres in Jammalamadugu in AP

Jindal may buy Reddys' dream steel project

Janardhan Reddy

The company has approached Sajjan Jindal Group of companies to purchase the project.

Contacted by Deccan Herald on Saturday, Dr Vinod K Nowal, JSW Director and Chief Executive Officer, Vijayanagar works, said representatives of Brahmani approached the Jindal group a month ago.

Diligence checks

“The project promoters asked us to purchase the entire company. We will decide about it after carrying out due diligence checks. The total area owned by the promoters is 11,700 acres”, he said.

With the Reddy family was close to Y S Rajashekhara Reddy, the late Chief Minister of Andhra Pradesh, Janardhan Reddy had told the media that his company faced no dearth of funds to execute the project.

The Andhra Pradesh government had reportedly sold the land to Janardhan Reddy at Rs 18,000 an acre.

Revenue from the Obalapuram Mines Company (OMC) was to be invested on the steel plant, but with Rosaiah becoming chief minister in the aftermath of the demise of YSR and with the Supreme Court stopping mining in the OMC and five other surrounding mining areas in Bellary-Andhra Pradesh border, Reddy’s business took a beating.

Work on the Brahmani Steel project located in Jammalamadugu of Kadapa district of Andhra Pradesh is yet to begin in real terms. Only a site office and some guest rooms have come up, according to sources. The investment so far gone into the project may not exceed Rs 100 crore, it is said. 

No shares

To a question whether Jindal will be having stakes or purchase the steel firm, Nowal said, “Definitely we are not interested in picking stakes. We are not for joint ventures. It may take two months for us to do the ground work. A team will be sent to the site area”.
As Jindal is not into mining in Bellary, whether it would negotiate for purchasing OMC too? Nowal replied in the negative.

“We do not want to have anything do with OMC. The steel plant in Kadapa and OMC are two different entities. We already have a steel plant in Bellary. Hope government will change its policy to ensure that only steel plant promoters should get into mining business”, he said.

He said his company could not get mining lease as those already operating in the field thwarted the move by going to court.

If Jindal takes over Brahmani, the plan capacity at the company’s Bellary project will be four million tonnes, where as the promoters have pegged it at 1.25 million tonnes now. The company’s Bellary plant will touch 16 MT by 2014.