The company has expressed interest in acquiring some of the stressed steel-makers, but there has not been much progress on that as banks appear not keen to take a haircut.
JSW Steel, India's largest and most efficient steel-maker, does not expect inorganic growth to contribute much to its capacity expansion. The company has expressed interest in acquiring some of the stressed steel-makers, but there has not been much progress on that as banks appear not keen to take a haircut.
In an exclusive interview with Moneycontrol, JSW Steel’s Joint Managing Director and Group CFO Seshagiri Rao, said: “For any new investor to come and take over the entire debt (of a stressed steelmaker) is a remote possibility. A significant amount of haircut is involved to make these companies sustainable and profitable going forward. It may be a difficult decision for banks to take haircuts."
Earlier this year, JSW Steel had made a bid to acquire Bhushan Steel for Rs 25,000 crore. However, that has not materialised from the look of it as yet. The troubled steel-maker has ratcheted up a debt of Rs 47,500 crore.
JSW Steel has a capacity of 18 MT currently and is looking at expanding its capacity to 40 MT over the next decade. The steel-maker, amongst the lowest-cost producers of steel, will take its existing capacity to 27 MT through brown field expansion at Vijaynagar and Dolvi.
Explains Rao: "We have been evaluating various options. If you look at our plan, we have environmental clearances to increase the capacity of our Vijaynagar plant from 12 MT to 16 MT. At Dolvi, we have the approval to double capacity to 10 MT. This means we have the approval to increase from 18 MT to 27 MT. Capacity expansion is in place at a very good investment cost per tonne."However, the journey from 27 MT to 40 MT capacity could be inorganic or through green field projects in Jharkhand or Odisha.