The Hindu Business Line : Jindal South West chalks out Rs 10,000-cr expansion plan

JINDAL South West Steel Ltd (JSW) has firmed up an ambitious target of emerging as the country's `largest single site steel plant' by 2010. It is currently the third largest steel maker after SAIL and Tata Steel.

The company has chalked out an expansion programme involving a total investment of over Rs 10,000 crore spread over the next five years, according to Mr J.P.N. Lal, Executive Director.

Addressing a group of visiting journalists at the company's plant located at nearby Toranagallu village, he said that the expansion would be taken up in three phases.

The first phase, involving an investment of around Rs 1,500 crore, would enable the company increase its production capacity to four million tonnes a year by the current fiscal-end from the existing level of 2.5 million tonnes.

The company proposes to fund the project through internal accruals to the tune of Rs 450 crore and raise the rest from institutions, Mr Lal said.

According to Dr Vinod Nowal, Executive Director, the second phase of expansion involves raising the capacity to seven million tonnes a year by March 2008; the third phase would take the capacity to 10 million tonnes by 2010.

To reach the capacity level of four million tonnes, the company has invested around Rs 10,000 crore from the inception, he added.

Dr Nowal also said that the company has rationalised its debt-equity ratio from 2.37 in 2003-04 to 1.33 towards the end of 2004-05. It has also repaid and prepaid around Rs 1,079 crore from internal accruals during the last fiscal.

For an amount of Rs 1,553 crore, the company refinanced high-cost debt by raising low-cost debt with varying maturity profiles.

As a result, the company could successfully reduce its average cost of debt from 9.42 per cent to 8.27 per cent a year, he added.

Stating that the company was currently engaged in manufacturing basic products, he said that it possesses the necessary infrastructure to produce value-added products.

Aimed at meeting the growing demand for products in the automotive and auto components sectors, the company also proposes to set up a cold rolling complex with capacity of one million tonnes a year.

According to the techno-economic feasibility study conducted by MECON Ltd, the cost of setting up this project was estimated at Rs 900 crore and would be completed in 24 months.

This project would be financed out of cash accruals of Rs 400 crore and debt of Rs 500 crore, Mr Lal said.

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