The promoters of JSW Steel have decided against conversion of preferential warrants and let go Rs 529 crore paid when the warrants were allotted in June last year.
The company had fixed the conversion price at Rs 1,210 at the time of the allotment. JSW Steel shares on Friday closed five per cent lower at Rs 510. The shares have fallen to the current level from a high of Rs 1,240 achieved in December year.
JSW Steel had issued 1.75 crore warrants to the promoters to raise funds for capacity expansion. The conversion of warrants would have pushed up the promoters' holding in the company to 49.70 per cent from the current 44.99 per cent.
Capacity hiked
The company recently hiked its capacity to 10.3 million tonne per annum at its Vijaynagar plant in Bellary. Last year, it also acquired 41 per cent stake in loss-making Ispat Industries for Rs 2,157 crore and raised it further to 70 per cent through an open offer.
The acquisition added 3.3 mtpa (million tonnes per annum) of capacity, making JSW Steel one of the largest steel manufacturers in the private sector. Further JSW Steel proposes to set up a 10 mtpa integrated steel plant at Salboni in West Bengal with an investment of Rs 35,000 crore. The company debt as of today stands at about Rs 18,000 crore.
JSW Steel ran into trouble after the Supreme Court banned iron ore mining in over 10,000 hectares at Bellary, Karnataka. The ban had pushed up the cost of operation which led to the company slashing output by 70 per cent at Vijayanagar plant to three million tonnes.
In was alleged that a large quantity of iron ore was fed to JSW Steel plant from the Bellary mines. Later, in an order on August 5, the Supreme Court permitted NMDC to mine one million tonnes of iron ore a month from its two mines.
JSW Steel bought over 1.8 million tonnes of iron ore from NMDC in October to increase its production by 35-40 per cent. It requires about 1.65 million tonnes of iron ore, having 62 per cent iron content, to run the Vijayanagar plant at full capacity.