In a bid to remain focused on augmenting steel making capacity, Sajjan Jindal-led JSW Group has put its proposed R4,200-crore greenfield aluminum project on hold. The steel major, which acquired debt-ridden Ispat Industries in December last year, wants to focus on leveraging the steady growth in steel demand in India to become the country?s largest steel maker, ahead of public sector SAIL. Steel demand is expected to grow in double digits this year too, after a 10.5% growth in financial year 2010-11.
JSW is expanding its capacity from 7 mt to 10 mt in Vijayanagar. This will be completed in June. This, coupled with its 1 mt capacity at Salem and another 3.3 mt of Ispat, takes its total capacity to more than 14 mt. Seshagiri Rao, joint MD and group CFO told FE, ?We are currently not pursuing our aluminum expansion. That project is on hold as of now.?
When asked whether the company is still looking for a suitable partner for its aluminum expansion, Rao said, ?Not as of now.? JSW Aluminum was incorporated on July 8, 2005, as a special purpose vehicle to set up 1.5 mt alumina plant in Vizianagaram district (Andhra Pradesh). The plant was expected to become operation in April 2010. The company had earlier said that the project cost of R4,200 crore would be funded via mix of debt and equity, of this R3,000 crore debt would be raised from various financial institutions.
However, hit by the economic slowdown and short of funds, the group in 2009 had slowed down on its other expansion plans including aluminum till the market revived. Shares of JSW Steel were up 1.89% to close at R940.75 on the BSE on Wednesday.
JSW will further expand its steel making capacity to 12 mtpa from 10 mtpa at Vijayanagar with an estimated cost of R 2,695 crore by June 2013, which will be financed by way of cash accruals to the extent of R945 crore and balance through debt. The steel major has planned a capex of R15,000 crore to be spent over three years, of which R8000 crore will be spent in the current year.
JSW Steel, has reported a growth of 29.89% in its consolidated net profit to R793.63 crore for the fourth quarter ended March 31, 2011 against R611.02 crore in the corresponding quarter last year. Rise in volumes and increase in steel prices in the January to March quarter led to bottom line growth for the company.