JSPL Angul expansion to strengthen presence in flat segment

Steel Insights Bureau

Jindal Steel & Power Ltd (JSPL) is getting transformed into a flat steel major with its expansion project.

“The Angul capex program will help JSPL increase the proportion of flat products making it a flats heavy player similar to JSW and Tata Steel. Increased proportion of flats will also help improve margin profile given flats offer higher margins vs longs,” JM Financial said in a report on JSPL.

JSP is pursuing an ambitious capex program amounting `24,000 crore over FY22-27. The capex program primarily comprises Angul expansion which will increase crude steel capacity from 9.6 million tons per annum (mtpa) in FY22 to 15.9 mtpa by FY25 and expenses towards 1,050 MW power plant acquired from Monnet Power.

“The Angul capex is a low-hanging fruit offering low-cost, short-gestation and valueaccretive brownfield expansion. The ongoing expansion plan would a) increased proportion of flat products b) reduce mismatch between finished and crude steel capacity c) Cost efficiencies to aid margins,” JM Financial said.

Long products provides pricing stability

So far, a significant proportion of value-added steel have been in the form of long products that have demonstrated less susceptibility to cyclical price movements.

Scale-up of operations and the emphasis of the management on high-margin products with a significant proportion of value-added long steel products has encouraged rating agency Care to revise its rating outlook to Positive from Stable.

“The company is largely into long products and specialty grade flats, where the threat of imports is lesser. Besides, the company has established itself as one of the preferred suppliers of rails (including specialty rails) to the Indian Railways and its controlled entities, including the Dedicated Freight Corridor Corp of India Ltd (DFCCIL) and metro projects. JSPL has the capability to manufacture one of the longest rails in India,” Care said in a release.

“During 9 months of FY23 (AprilDecember), the crude steel production and