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Even as JSW Steel embarks on an ambitious plan to expand capacity in India and overseas, it will adhere to conservative financial policies, said its top official.
“While pursuing all growth opportunities — whether organic or inorganic — we will continue to demonstrate prudence and follow conservative financial policies,” said Sajjan Jindal, Chairman and Managing Director, JSW Steel.
The company, which is competing with Tata Steel for the number one position in the domestic steel industry, is investing Rs 45,000 crore over a four-year period from 2017-18 to 2020-21. The investment will see its annual capacity in India increasing to 24.7 million tonne, from the present 18 million tonne by March 2020.
The organic expansion includes doubling the capacity of its Dolvi plant, which was acquired from the erstwhile Ispat Industries. The plant at present has a capacity of 5 million tonne per annum.
JSW Steel’s biggest facility is at Vijayanagar in Karnataka, which makes 12 million tonne of steel a year.
Inorganic growth
“Inorganic growth has always been an integral part of our growth journey and we will continue to explore strategic opportunities, both in domestic and international markets,” said Jindal.
In India, JSW Steel bid for a number of stressed assets, including Monnet Ispat, Bhushan Steel and Bhushan Power & Steel. It has emerged as the preferred bidder for Monnet Ispat, which has a capacity of 1.5 million tonne per annum.
“This acquisition will be crucial in furthering our footprint in the central and eastern markets of India,” Jindal added. The Monnet Ispat facility is located in Chhattisgarh.
While it continues to look for opportunities in the domestic market, it has been JSW Steel’s aggression in the international steel markets that have surprised pundits.
This will help the company limit the rising protectionism in global economies, said Jindal.
“We have selectively pursued some value-accretive acquisitions in the overseas markets during the year with the objective of replicating our low capital cost model in a relatively higher operating cost environment,” said Jindal.
Through two separate investments, JSW Steel presently has an annual capacity of 4 million tonne in the United States. In Europe, it has acquired Italy’s Aferpi, which has a capacity of 1.3 million tonne per annum.
Overall, the company plans to have 10 million tonne capacity in the international locations, and 40 million tonne in India, by 2030.
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