In its recently held 24th AGM (Annual General Meeting), JSW Steel’s Chairman and MD, Mr. Sajjan Jindal said that the company plans to turn around and merge the bankrupt Monnet Ispat with ‘JSW Steel’ brand within a year.
Based on its past experience of acquiring a stressed asset and turning it around within a year, the company is hopeful in case of Monnet Ispat also. In 2010, when JSW Steel acquired a stressed Ispat Industries he had given a similar promise of turning the business around in one year.
Last week, the National Company Law Tribunal (NCLT) has approved AION-JSW Steel consortium’s INR 2,875 crore takeover proposal for the 1.5 MnT asset in Chhattisgarh run by Monnet Ispat and Energy Limited (MIEL).
The acquisition of 1.5 MnT steel plant of Monnet Ispat, is quite crucial for JSW Steel as the MIEL plant is located quite close to the mineral-rich belt of Chhattisgarh and Odisha and will help JSW Steel to extend its reach in the central and eastern markets.
JSW Steel’s ambitious capex plans
JSW Steel is planning to invest about INR 45,000 crore over a period of four years from FY2017-18 to FY2020-21, to expand steelmaking capacities, besides modernising and expanding capacities of its downstream businesses.
The company’s top management believes that these projects are expected to further enhance their efficiencies and generate superior returns. The completion of these projects will take JSW Steel’s overall capacity from 18 MTPA currently to 24.7 MTPA by March 2020.
The company is looking for inorganic growth, both in domestic and international markets to expand capacities as part of its strategy.
In last year, JSW Steel has already announced an investment of USD 1 billion in the US for the backward integration of existing plates and pipe mills facility in Texas, U.S. as well as in buying Ohio-based steel plant, Acero Junction Holdings. It also acquired Italian steelmaker Aferpi for INR 441 crore.
JSW Steel’s future ploy
As far as the outlook for FY19 is concerned, Mr. Sajjan Jindal quoted that with 93% capacity utilisation targeted for the current year, there is a limited headroom to deliver volume growth till the company completes its expansion projects by March 2020.
Also, the company will be looking out to operationalise the remaining 3 of the 5 captive iron ore mines the company has in Karnataka. With this, JSW expects to meet approximately 20% of the total iron ore requirement at Vijayanagar. The company is also working on starting mining at the Moitra coking coal mine in Jharkhand by next year.
In terms of demand, Mr. Sajjan Jindal is quite optimistic about the domestic steel demand in the country. He commented that even at a reasonable rate of growth of around 7% p.a. for the overall steel demand, India will need to create over 150 million tonnes of new steel capacity in the next 10 years and JSW Steel will be looking forward to capitalising on this opportunity.
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