Jindal Stainless to Invest INR 575 Crore on Capacity Upgrade

Jindal Stainless Ltd (JSL) has committed an investment of INR 575 crore to de-bottleneck its Kalingangar unit and expand capacity to 1.1 MnT per annum (mtpa) from 0.7 mtpa. The expansion would be met through the company’s internal accruals.

By 2020, JSL is eyeing capacity of 1.8 mtpa by investing INR 1,600 crore. The facility at Kalinganagar produces all grades of stainless steel and exports to Europe and South East Asian countries. In the December quarter, JSL posted a profit of INR 40 crore as against a loss of INR 134 crore in the corresponding quarter of previous fiscal. Capacity utilisation of the Kalinganagar plant was 92 per cent in Q3 and sales volume was higher by 25 per cent.

Meanwhile, Jindal Stainless Group led by Ratan Jindal is on the verge of completing its de-merger exercise. The de-merger which has witnessed two separate entities carved out- Jindal United Steel Ltd (JUSL) and Jindal Coke Ltd (JCL), is expected to be completed by the end March this year.As of now, two flagship companies- Jindal Stainless Hissar Ltd and Jindal Stainless Ltd are listed entities. The move behind the de-merger is to apportion debt between the segregated entities.

The decision for de-merger stems from factors like erosion of net worth, accumulating losses and rising interest rates. Between them, Jindal Stainless Hisar Ltd (JSHL), Jindal Stainless Ltd (JSL), JCL and JUSL have a debt totaling INR 7,800 crore. After the de-merger, the debt would be distributed as:- JSHL- INR 2,600 crore, JSL- INR 2,300 crore, JCL- INR 500 crore and JUSL- INR 2,400 crore. Jindal Stainless Group had gone for Corporate Debt Restructuring (CDR) in 2009 at the time of global economic meltdown.

Both JUSL and JCL would be subsidiaries of JSL where the parent company will hod 26 per cent stake. The remaining equity would be held by the promoters’ family.

In the two newly incorporated entities- JUSL and JCL (both subsidiaries of JSL), JSL which oversees the Kalinganagar operations, will hold 26 per cent equity each. Balance shares would be held by the promoters’ family.

As a fall-out of de-merger, JSL would handle Steel Melting Shop (SMS), ferro alloys, captive power plant (CPP) and railway siding. JUSL would take care of the Hot Strip Mill (HSM) operations and the onus would be on JCL to oversee coke oven operations. As of now, there are no plans to list either JUCL or JCL.