JSL chalks out Rs 5,000 cr capex

NEW DELHI: Leading domestic stainless steel maker Jindal Stainless Ltd (JSL) will invest an additional Rs 5,000 crore in its Orissa plant to double its production capacity to 1.5 million tonnes annually.

The company is also looking at the possibility of tapping the market through a public issue to part fund the expansion plans.

"We are planning to make fresh investments of around Rs 5,000 crore in our Jajpur plant in Orissa, which would double our overall production capacity," JSL Chief Executive officer and Managing Director V S Jain told PTI.

When asked how would the company fund its expansion plans, Jain said: "The project would be funded mainly through internal accruals but in case need arises we would also tap the market."

The expansion plan, expected to be completed in 36 months, would take JSLs overall production capacity to 1.5 million tonnes per annum from the present 0.7 million tonnes.

The company presently operates through its three plants in Hisar, Visakhapatnam and Jajpur.

JSL expects Hisar plant's capacity to touch 0.6 million tonnes this year while the Jajpur plant is presently operating at around 0.1 million tonnes per annum.

JSL has already invested Rs 2,300 crore in setting up a greenfield facility in Jajpur. The first phase of investment, scheduled to be completed this year, was made to install basic input requirements including a ferro-chrome unit and a captive power plant at the facility.

"The investment would be made in addition to the Rs 2,300 crore invested in the first Phase. We plan to have an installed capacity of around 0.8 million tonnes in Jajpur by the end of Phase II," Jain said.

He said the company was looking at having an overall capacity of 1.6 million tonnes at Jajpur. The company would start a third phase of expansion at the plant to achieve 1.6 million tonne target after completion of the second phase.

"The third phase of expansion at the Jajpur unit depends entirely on the market demand. We are looking at doubling the plants capacity to 1.6 million tonnes per annum in the third phase," he added.

JSL had, in 2004, acquired Maspion steel in Indonesia to strengthen its presence in the international market. Jain said the company, however, was not looking at any more acquisitions in the overseas market but wants to consolidate its position within the country.

He said though the per capita consumption of stainless steel in the country is very low, the company was optimistic that boom in construction sector would push this demand in future.

"China consumes four kg of stainless steel per capita compared to one kg in India. The high consumption there can be attributed to a boom in construction sector which is also expected to fuel the demand in India," Jain added.

The company had earlier this week reported a whopping 440 per cent jump in net profit during the third quarter on higher capacity utilisation and strong market demand.