The stock of Jindal Steel and Power (JSPL) shot up 26 per cent last Thursday. This was after the company won the Gare Palma IV/2 and 1V/3 coal blocks in the ongoing e-auctions. While the stock closed marginally lower on Friday after the company did not qualify for the auction of the Gare IV/1 block based on its price quote, it nonetheless ended the week 28 per cent up.
These blocks (annual capacity of 12.25 million tonnes) were among the ones de-allocated last year after the Supreme Court found the allocations made between 1993 and 2010 illegal. The de-allocation has been the single biggest overhang on the stock, down 27 per cent since September.
JSPL, which is into steel manufacturing and power generation, operates a 7.75 million tonnes per annum steel capacity and has a 2,800 MW power plant at Tamnar in Jharkhand.
The failure to win the Gare Palma IV/2 and 1V/3 blocks would have affected the operational profitability of the Tamnar plant. The power business accounted for close to 60 per cent of the company’s profit in 2013-14.
While JSPL will not be able to bid for the Gare IV/1 block, which feeds the company’s Raigarh steel plant, it can bid for other blocks.
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