Jindal Plans Subsidiary For Cold Rolling Division. (The Observer 17.12.99)

DOMESTIC stainless steel major, Jindal Stainless Ltd (JSL) has decided to hive off its cold-rolling division as a separate subsidiary.

At a meeting on Wednesday the board of directors of Jindal Stainless gave the in-principle approval to hive off Vasind division as a separate company so as to make JSL a fully integrated stainless manufacturer.

The company has reversed its earlier plan to sell off the cold rolling unit to the group flagship company Jindal Iron and Steel Co (Jisco) through a cash-neutral deal.

It has decided that the new entity will be sold off to Jisco after one or two years.

Jindal Stainless vice-president (corporate finance) Arvind Parakh said, "We have received the board clearance for separating the unit, and we will soon work out the nitty gritty of the demerger."

Mr. Parakh said that the deal will be completed in this financial year itself and it would be reflected in the next balance sheet of the company and the valuation would be done at book value.

Jindal Stainless would hold 95 per cent stake in the new entity and the rest will be held be group companies. The company has also received the in-principle nod from the financial institution and banks for hiving off the unit.

He said that the Vasind unit posted a turnover of Rs 200 crore and has a capacity of 15,000 tonnes per annum.

JSL's earlier plan to demerge Vasind unit and sell it off to Jisco ran into rough weather s the financial institutions and banks raised objection to the deal considering the poor financial position of Jisco.

The FIs and banks later asked the company to revise the scheme and submit the report to them. JSL was planning to sell the unit for Rs74/ crore to Jisco by allowing it to make deferred payments.