dpsc ltd

Jindals pick up 10% in Descon

Calcutta, May 2: JSW Group has bought into city-based IT firm Descon by scooping up a 10 per cent stake held by DPSC Ltd in back-to-back deals that turned one-time fierce competitors into close collaborators. The $3.7-billion group, having interests in steel, power and infrastructure, is also in talks with three other shareholders of Descon to take management control. A formal announcement is likely to be made by JSW shortly. DPSC, formerly Dishergarh Power Supply Corporation, and Descon had cross-holdings between themselves. Descon held 32.31 per cent in DPSC, which in turn held 10 per cent in Descon. However, Descon decided to exit the power firm after a consortium led by city-based infrastructure finance company Srei became its majority owner in February. It sold a 17.31 per cent stake to Orbis Power Venture (a special purpose vehicle of Srei) in an open market transaction in early April. The company sold the remaining stake in an open offer made by Orbis last week, netting about Rs 97 crore from the two-phased transaction. DPSC, in turn, sold its holding in Descon to JSW. Fierce bidding DPSC was on the radar of JSW and Srei for a long time. Both the company had made strategic moves to corner the power firm whose majority shares (57.17 per cent) were to be sold off by public sector Andrew Yule, the Life Insurance Corporation and the General Insurance Corporation. JSW cornered Descon’s 32.31 per cent holding when the latter pledged the stake to the Jindals against a loan. The Srei consortium, on the other hand, scooped up nearly 5 per cent in DPSC from the National Stock Exchange. JSW and Srei were in the fray when the bidding started. Descon joined the process later. On the day of open auction in November last year, JSW backed out but Srei fought till the end to emerge as the highest bidder. However, the story did not end there. It took a lot of political persuasion from the Centre and legal prodding from Calcutta High Court to actually complete the sale process in favour of Srei. Fresh moves Once Srei became the majority owner, foes turned friends. Descon decided to cash out realising its role would be reduced to that of a minority shareholder. JSW played its part by releasing the pledged shares. DPSC sold out a non-core business to JSW, which plans to engage Descon for IT support and engineering work for its upcoming steel and power project in Bengal. JSW plan The Sajjan Jindal group is in talks with three venture capital funds — two based in the UK and one in Singapore — to pick up their combined 49 per cent holding in Descon. The IT firm did business of Rs 16 crore last year with nominal profit. However, it is sitting on a cash pile of Rs 105 crore through sales of DPSC and Tide Water Oil stakes.