Dear Sir, You may be aware that Sambad has carried an article today about IMFA’s joint venture with Posco. The article is highly misleading and, moreover, no attempt was made to get our views before publishing the story.As such, we would like to take this opportunity to bring certain facts to your kind attention : IMFA has had a relationship with Posco since more than a decade and supplies ferro chrome against a long term contract. However, there is no connection whatsoever - either overtly or covertly - with Posco’s proposed project in Odisha. The news about the joint venture was widely reported as far back as December 2010 besides the Company itself intimating the Stock Exchanges at various points as is the requirement. Therefore, we fail to understand Sambad’s motive behind publishing this story after nearly 3 years. The MoU was signed in September 2009, IMFA Alloys Finlease Ltd (IAFL) was incorporated in November 2009, proposed joint venture was approved by IMFA’s shareholders in December 2010, joint venture agreement was signed in January 2011 and the transaction was completed in February 2013 after IAFL received RBI approval. IAFL is a Non-Banking Finance Company (NBFC) which has been approved by RBI (please note that the approval is in place and not pending as reported) and owns a 30 MVA furnace along with related assets. Posco was allotted 7.26 lakh shares so as to convert IAFL from a 100% subsidiary of IMFA to a 76:24 joint venture with Posco which paid US$ 5 million (approximately 27 crores) for the 24% stake which is justified given the capital outlay on the project. The price per share is a reflection of the small equity base of IAFL and no motive can be drawn from the fact that part of the consideration received has been reflected as premium in the Balance Sheet. Furthermore, the said amount was utilised to pay back debt incurred to set up the project.The furnace and related assets were leased back to IMFA to operate given its expertise; as such, IAFL was never going to actually operate the furnace. However, Posco has given an off-take assurance to IMFA for the entire output. This arrangement is above board and, moreover, we have been totally transparent in our dealings. The attempt to somehow link this transaction with the re-election of the Hon’ble Chief Minister of Odisha in 2009 and speculate if this investment was “political appeasement” is without any foundation and highly objectionable. Similarly, the difficulties faced by Posco’s Odisha Project with which we have no connection has no relevance whatsoever. While we have written to the newspaper to publish our counter with equal prominence, we have taken the liberty of writing to you in the interest of bringing to light the facts of the case. We will be happy to provide any further information and/or clarification that you may need in this regard. Sincerely, (Sanjeev Das) Head - Corporate Affairs & Legal IMFA, BHUBANESWAR, ODISHA.
Posted on: Thu, 04 Jul 2013 06:16:45 +0000
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