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Dempo to divest stake in flagship co to fund expansion

Dempo Group, one of the biggest players in iron ore in India, is planning to raise around Rs 1,500 crore for expanding its petroleum coke business. The company plans to divest stake in flagship mining company — VS Dempo — to support its expansion plans.

The Rs 2,000-crore group is believed to be in talks with three PE firms and the deal would be sealed by the end of the month, sources close to the development said. The company plans to invest funds in its Goa Carbon petroleum coke business. According to sources, the group is looking at setting up a plant in Gujarat near Vadodara with additional funds.
When contacted VS Dempo chairman Shrinivas V Dempo told ET: “We would need around Rs 1,200 crore for supporting our petroleum coke business. We would sell stake in our iron ore business to support this.” There were also talks that the company would be selling off the iron ore business all together. But later on, it is believed, the company instead decided to sell a substantial share in the iron business.

“Currently, we hold 100% in the iron ore business and we are in talks with PE players to sell between 20% and 40%, but it won’t be fair on my part to divulge names of the private equity players,” added Mr Dempo.

Mumbai-based investment banker Ambit has been appointed advisor to Dempo. If the deal comes through by the end of the month, it would help the company set up a plant in Gujarat by next year. It is also believed that two subsidiary companies of the group, also into mining business, may be merged with VS Dempo. If the deal comes through, it would be the biggest deal in the sector in India till date.

The company is planning to raise the capacity in petroleum coke segment by over 70%.

The new plant in Gujarat would target an outlay of Rs 500 crore-Rs 1,000 crore in a couple of years. Earlier, it was also made public that Goa Carbon would invest an additional Rs 200 crore to put up a 18-mw power plant across its three operating facilities in Paradip, Bilaspur and Goa and increase the capacity of its Paradip plant to 2,20,000 tons per annum (TPA) from 1,00,000 tpa now.

Source: Economic Times

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