Two companies in the Jindal group have triggered off a consolidation phase in the reviving Indian steel industry. Sajjan Jindal-controlled Jindal Vijayanagar Steel Ltd (JVSL) and its promoter company Jindal Iron and Steel Company Ltd (Jisco) are considering a merger of their steel operations. The move would lead to the formation of a Rs 4,398 crore fully integrated steel conglomerate. The Jisco board on Tuesday approved a proposal for the merger of its steel business with that of JVSL and appointed ICICI Securities Ltd and RSM & Co as consultants for the proposed restructuring programme. The board approved appointment of consultants and valuers to evaluate and advise on the proposal for consolidating its steel business and JVSL, Jisco informed the BSEe. A Jindal official said that the move is with the intention to reduce transaction costs in manufacturing, which is avoidable if consolidation takes place. ‘‘Any consolidation should be among equal partners, and this is the right time,’’ said the official. Even after consolidation, the Jindal steel conglomerate would be far behind Tata Steel in terms of turnover. Tisco’s turnover in 2002-03 was Rs 9,793 crore. Jisco holds about 28.3 per cent in JVSL, which is a 1.6 million tonne hot-rolled (HR) coil manufacturer. JVSL was set up as a backward integration project where Jisco was the promoter holding over 50 per cent in the early 90’s. Meanwhile, theJisco scrip opened at Rs 169.95 and touched a high of Rs 174.80 to close at Rs 165.35 registering a decline of 2.71 per cent on the BSE. JVSL opened at Rs 17.13 and touched an intra-day high of Rs 18.43.
