Tata Steel Ltd. (500470.BY) Friday said it is studying Rio Tinto Ltd.'s (RIO.AU) A$3.9 billion takeover offer for Riversdale Mining Ltd. (RIV.AU), in which the Indian company owns a 24% stake, a day after a consortium of Indian state-run companies appointed an advisor for a counter-bid.

In a regulatory filing, Tata Steel said it would "evaluate the takeover bid in the context of other alternatives available to Tata Steel." It didn't say what the other alternatives were.

Meanwhile, the chairman of Indian consortium International Coal Ventures Ltd. denied that the group had initiated talks with Tata Steel for a possible counter-bid for Sydney-based Riversdale.

"No.. any decision on bidding will be taken after the merchant bankers' report," ICVL Chairman C.S. Verma said.

ICVL--a joint venture between Steel Authority of India Ltd. (500113.BY), NTPC Ltd. (532555.BY), NMDC Ltd. (526371.BY), Rashtriya Ispat Nigam Ltd. and Coal India (533278.BY)--Thursday named Citibank as its merchant banker to advise on a possible counter-bid for Riversdale.

If the Indian consortium decides to go ahead, it will have to top Rio Tinto's offer price of A$16 a share for the Mozambique-focused miner.

Rio Tinto's cash offer was endorsed by Riversdale's board Thursday after it improved its bid from an original indicative offer of A$15 a share announced on Dec. 6.

But analysts said the diversified mining giant may have to again sweeten its offer. Two major shareholders told Dow Jones Newswires on Dec. 6 that they would be unlikely to sell for less than A$20.

Riversdale has 13 billion metric tons in coking and thermal coal reserves in its Benga and Zambeze projects in the southern African country of Mozambique. Acquiring the miner would help Indian companies secure much-needed coal supplies, as production in India falls well short of demand.

Steel and mining analyst A.S Feroze said it would be difficult for Tata Steel to join hands with the consortium of five-state run companies.

"Theorotically I see difficulty in it. ICVL is a consortium and taking a decision after talking to the partners will not be a smooth process," Feroze said.

But he added that it wouldn't be hard for either Tata Steel or ICVL to finance a counter-bid as bankers would be willing to provide funds "if it's a good deal."

In a separate statement to the Bombay Stock Exchange, Tata Steel said it has got shareholders' approval to raise long-term finances, though it didn't provide a reason for the move.

India's coal demand is forecast to rise to 713.24 million tons next financial year beginning April 1, when supply will likely be 629.91 million tons. To meet the shortfall and secure supplies, state-run and private companies are scouting for assets in places such as Africa, Indonesia and Australia.

-- By Ashutosh Joshi and Saurabh Chaturvedi, Dow Jones Newswires; +91 22 6145 6120; ashutosh.joshi@dowjones.com
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