Tata Steel, SAIL to dilute 10% stake to raise funds

Mumbai: mjunction Services, a 50:50 joint venture between Tata Steel and Steel Authority of India (SAIL), is in talks with private equity firms to dilute 10 per cent stake to raise funds, according to Managing Director and Chief Executive Officer Viresh Oberoi.

'The idea is to go for a public offer (IPO) in about three years. Before that, the right step will be to go for private equity investment. We are looking at a potential investment for 10 per cent stake from private equity companies,' Oberoi said.

Both partners are likely to divest equal stake to facilitate the funding, he said.

'We are in talks with several private equity firms and matters are likely to be finalised in three to four months.'He, however, did not detail the amount the company expects to raise through the stake sale.

'It is for the private equity companies to make an offer which will also help us in a fair evaluation of the company. Several of them have approached us but we cannot give more details,' he said.

The company is also looking at acquisitions to fuel inorganic growth and is building resources of Rs 200 crore for the purpose.

'We are building up a war chest of 200 crore over the next five years to go for inorganic growth in India as well as abroad,' Oberoi said.

Oberoi refused comment on market buzz about the company closing in on an acquisition in the publication business, most likely the Chennai-based IPFonline.

'I neither confirm nor deny it. But the first acquisition will be announced soon,' he said.

mjunction is India's largest e-commerce company and runs one of the world's largest e-marketplaces for steel.

It also has e-commerce platforms for coal and automobiles. In 2007-08, the value of total transactions on the company's portals was around Rs 10,400 crore.

The company is eyeing revenues worth Rs 50,000 crore by 2012 from Rs 10,000 crore right now, largely led by launches autojunction, straightline, and mjunctionedge. straightline is mjunction's e-retail initiative, while autojunction is its automobile e-commerce business.

mjunctionedge, on the other hand, is its recently launched content business.

'straightline will offer Tata products as well as other FMCG products. We are in the process of tying-up with around 600 sellers for more products on offer on the portal. Currently, we have about 20 sellers,' Oberoi said.

The company is also planning to tie-up with small and medium retailers who could sell their products on Straighline.

Another source of revenue for the company would be its recently launched mjunctionedge portal which is its content business.

mjunction will upload its magazines - Steel Insights, Coal Insights, and Sourcing Insights - on mjunctionedge.

Revenues from the website will be subscription and advertising driven.

'We are in the process of digitising the content for the website. We think relevant information on the sectors is of relevance to a lot of consumers,' Oberoi said.

The company is also investing Rs 20 crore in technology upgradation and marketing.