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JSW Ispat finalises Rs 2,140-cr integration plan

25 Jan 2012 Evaluate

JSW Steel has finalised a Rs 2,140-crore investment plan in its subsidiary JSW Ispat Steel Ltd to set up a coke oven, a pellet plant and a cold rolling mill. The investments will be made through a special purpose vehicle, Amba River Coke Ltd, a wholly-owned subsidiary of JSW Steel. The projects will come up at JSW Ispat’s Dolvi unit (in Maharashtra’s Raigad district) and are part of a strategy to make the unit cost-effective. The coke oven and pellet plants will improve profitability and the cold rolled mill will increase the share of value added products from 10 per cent to 25-30 per cent. The coke oven battery would have a capacity of a million tonnes per annum (mtpa) and would cost the company Rs 975 crore. Of this, Rs 375 crore would be the equity component, the rest coming from loans. ARCL has the environmental clearance and the plant is expected to come on stream by the end of calendar year 2013.

The proposed four- million tonnes pellet plant at the site is estimated to cost Rs 835 crore and a 0.8 mtpa cold rolled mill Rs 330 crore. These two projects are to be financed through a debt-equity ratio of 2:1. These projects will be taken up for implementation on receipt of requisite clearances and commissioned in FY13-14. These three projects are integral to the turnaround effort at JSW Ispat. These projects were priority, to get Ispat on its feet. Experts believe backward integration will solve Ispat’s profitability issues.  Plans to set up the coke oven battery and pellet plant were readied even before JSW Steel decided to invest in Ispat Industries, now known as JSW Ispat Steel. Ispat had even signed deals for this with the Indian arm of Stemcor, the world’s largest steel trading company. With JSW Steel coming into picture, the agreement with Stemcor was dissolved and JSW decided to set up these projects on its own. Finally, over a year after the acquisition, JSW Steel has decided to proceed.

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