In an all cash deal, the Dempo Group from Goa sold its most traditionally identified possession and its oldest and most prized asset, its Goan mining business to a renowned mining company Sesa Goa for Rs 1,750 crore. The above deal which was clinched and signed on Thursday, was informed to the media at a press conference by the Dempo Chairman Mr Srinivas Dempo late on Thursday evening. The chairman further informed that the decision to exit the mining business was collectively taken by the Dempo family.
Mr Dempo however informed that the Group was not exiting from the age old mining activities and would continue the same in Sindhudurg and Maharashtra and added that the group was exploring mining resources which could be over 100 million tonnes in other parts of the world to meet the long term demands of its various customers.
Some time ago, the Dempo group had demerged the mining business and investment portfolio from the holding company V.S.Dempo and Co (VSD) to facilitate the way for a new investor which was the earlier plan. However with such an attractive offer from Sesa Goa made to them, they decided to take the exit route.
Sesa Goa is the subsidiary of the Anil Agarwal group Vedanta Resources which had earlier acquired Sesa Goa by springing a surprise high bid for Mitsui's 51 % stake in the company for $981 million beating the likes of Arcelor Mittal and Aditya Birla group.The acquisition of Sesa Goa had therefore marked the entry of Vedanta into the flourishing iron ore business.
The deal signed by Dempo with Sesa Goa includes all Goan based mining assets, mining leases, mining rights and includes the supporting logistical infrastructure such as barges, jetties, trans-shippers,and the facilities at the Mormugao port.
Dempo's chairman also informed at the press conference that although they are exiting the iron ore business in Goa, their mining activities would continue in Maharashtra and Jharkhand. Also its other activities such as calcined petroleum coke, pig iron, shipbuilding, food, travel and media would continue unhindered and the money received from this deal would be used to boost the business activities in the state of Goa.
Iron ore is a major raw material in producing steel which is a key ingredient used to manufacture automobiles and white goods. India's ore deposits are considered to be among the largest in the world and it is believed that this Dempo acquisition will consolidate Vedanta's position considerably in this segment.