Delhi-based Jindal Stainless Steel Ltd (JSL) on Wednesday said it will make an investment of ₹5,400 crore to boost production capacity and make acquisitions.
The company’s investment strategy involves pursuing growth through a blend of organic and inorganic expansions over the next three years. It will finance the acquisitions and capacity additions mostly through internal accruals.
As part of the investment, JSL has formed a joint venture (JV) with a Singapore entity for developing and operating a stainless steel melt shop (SMS) in Indonesia with an annual production capacity of 1.2 million tonnes per annum (MTPA) at an investment of more than ₹700 crore. The facility will increase the company’s melting capacity by over 40% to 4.2 MTPA over the next two years.
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Along with the Indonesian facility, the company will also be expanding its downstream lines in Jajpur, Odisha, at an investment of around ₹1,900 crore over the next two years. This will help the company increase its melting capacity. Additionally, the company has also earmarked nearly ₹1,450 crore towards the associated upgrade of infrastructure facilities, such as railway siding, sustainability-related projects, and renewable energy generation around the Jajpur facility.
It is also acquiring a 54% equity stake in Chromeni Steels Private Limited (CSPL), which owns a 0.6 MTPA cold rolling mill located in Mundra, Gujarat. The transaction entails an outlay of around ₹1,340 crore, comprising a takeover of existing debt of ₹1,295 crore and a balance of ₹45 crore towards equity purchase.
“With these acquisitions and investments, we have orchestrated a clear growth plan to become one of the leading players in the world. The Indonesian JV will get us the best of speed and raw material security, and the augmentation of the Jajpur lines will offer enhanced value for domestic and export customers,” said Abhyuday Jindal, managing director, JSL, in a press conference.
The investment in the upstream facility in Indonesia will be a plug-and-play model, with the facility coming up in an industrial park in the southeast Asian nation which already has an integrated induction furnace RKEF (rotary kiln–electric arc furnace) and AOD stainless steel smelting facilities.
“Since India does not have any indigenous source of nickel and availability of stainless steel scrap is limited, Indonesia is among the best alternative options to secure the availability of raw materials. Given the abundance of nickel ore in Indonesia, and the expertise of a JV partner in manufacturing stainless steel through the nickel route, the deal secures raw material availability and production efficiency at the same time,” Jindal elaborated on the rationale behind the investment.
This comes at a time the government of Indonesia has banned exports of nickel ore, as it is a key ingredient in the manufacture of Electric Vehicle (EV) batteries, while promoting foreign direct investments (FDI) into downstream facilities through long-term tax holidays.
The company, he said, will be equally sharing the profits from this facility. It will also have 100% off-take rights from this facility and reserves the first right to refusal.
JSL will also invest around ₹100 crore this year to start grooming the newly-acquired facility of Chromeni. The facility, previously wholly owned by the Chinese group Tsingshan Industries, could not sustain its operations for various reasons and has been closed. JSL plans to make it operational within the next six months.
This will support the overall facility balancing for Jindal Stainless at the company level. The improvement in the infrastructural facility will significantly enhance the efficiency in logistics, needed for catering to increased planned volumes, it added in a statement.
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This story has been published from a wire agency feed without modifications to the text.
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Published: 01 May 2024, 09:05 PM IST