A target statement sent to shareholders this week said the bid by Indian company Jindal Steel and Power undervalued Gujarat shares and did not reflect the company's future prospects.

It said the market price of Gujarat had exceeded Jindal's offer price of 20¢ per share since the bid and was trading at 21¢ the day before the target statement was released.

It also noted the market price had been more than double Jindal's offer price when Gujarat was first listed on the Australian Securities Exchange.

"Gujarat listed on the ASX in July 2007 at $0.50 per ... share," the statement said.

"Over the past thee-year period, Gujarat's shares have traded as high as $0.895 as recently as January 2011."

Jindal already has a 19.48 per cent stake in Gujarat and paid 25¢ for shares in July and August last year, the statement said.

Investors were told Gujarat was "an attractive investment proposition" with good future prospects and a niche position in the mining sector.

The target statement said the company had reduced its operating costs and had good access to modern longwall mining equipment as well as road and rail transport.

"The ... Wongawilli South Project is expected to have at least 30 years of mining resources when the three-year North West Mains development project to gain access is completed," the statement said.

Gujarat also told shareholders that directors, including executive chairman Arun Jagatramka and the major shareholder group, which owns 64.1 per cent of shares, planned to reject Jindal's offer.

According to ASX regulations, Jindal must now go to the public to raise its stake to more than 20 per cent.