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JSW Infrastructure, the unlisted entity of JSW Group, is evaluating options to acquire the iron ore terminal in Tamil Nadu owned by Sical Logistics. If it succeeds, JSW Steel can bring down its logistics cost substantially.
The terminal has an annual capacity of 6 million tonnes (mt) and is strategically located at Ennore Port, about 24 km north of Chennai Port. The capacity at the port can be doubled with a minimum investment.
In an exclusive interaction with Business Line , Seshagiri Rao, Joint Managing Director and Group CFO, JSW Steel, said: “This particular one (Sical Logistics) is interesting to us. We are examining it. Nothing has been decided yet”.
JSW Steel exports about 3.5 mt of steel and imports close to 25-30 mt (including raw materials) a year. It uses seven ports across the country to bring in raw material and export finished products.
“It means that the logistics cost is very important to us,” Rao said. However, he did not provide any details on the valuation of Sical’s iron ore terminal. JSW Group has a steel-making capacity of 14 mt, but does not have iron ore or coal mining rights.
With an eye on bringing down logistics cost and doubling its steel-making capacity to 20 mt at Vijayanagar in Karnataka, JSW plans to set up a 500-km slurry pipeline to import iron ore to the plant from a port near Goa.
Sical Logistics in a statement said it is not involved in any discussion to sell the terminal to JSW Steel. However, it did not deny discussion with JSW Infrastructure.
The Karnataka-based Coffee Day Group acquired a majority stake in Sical in 2011. The port handles over 26 mt of bulk and over 0.5 million TEUS of container cargo annually. Sical, which has a revenue of ₹800 crore, also provides offshore support services to the oil and gas industry.
JSW already has a presence in Tamil Nadu through its subsidiary JSW Steel Salem, which caters mainly to the automotive sector.
JSW acquired the sick Salem unit from Tamil Nadu Industrial Development Corporation in 2004 and has managed not only to turn it around but also enhance capacity to 1 mt from 0.3 mt a year with a focus on value-added products.
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