CORPORATE
Jindal Stainless group goes for major capex plan Steel Insights Bureau
J
indal Stainless group - consisting of Jindal Stainless Ltd (JSL) and Jindal Stainless Hisar Ltd (JSHL) - is going for consolidated capex of `2,600 crore, with estimated capex of `1,100 crore across FY22-23. JSL is doubling melt capacity in next 18 months while JSHL is expanding its Specialty Products Division. “The expansion will strengthen our ability to serve domestic and international customers across different market segments. With the post pandemic recovery, rigorous internal efficiencies, ongoing merger, and slated expansion plans, JSL is geared to maximise the value for all its stakeholders,” Abhyuday Jindal, Managing Director, JSL and JSHL said of JSL’s expansion plan.
JSL expansion plan
JSL is doubling capacity at Jajpur from 1.1 mtpa to 2.1 mtpa of SMS and downstream and upstream facilities at a cost of `2,150 crore at one-third of greenfield capex cost. The SMS is being expanded at a cost of `530 crore, while HRAP and CRAP capacity are being expanded to 1.25 mtpa and 0.75 mtpa at a cost of `125 crore. The steelmaking facilities should be completed by H2FY23. Backward integration through ferrochrome augmentation is at an estimated capex of `315 crore with capacity increasing to 350 kilo ton per annum. The estimated completion is Q3FY24. Balance capex is expected to be paid for a quality lab and other balancing activities. The capacities should be ramped-up by FY25. The three-pronged expansion plan constitutes expansion of melting capacity, and commensurate strengthening of backward and forward linkages:
♦ Melting capacity: Doubling of steel melting capacity from existing 1.10 million tons per annum (mtpa) to 2.10 mtpa at an estimated capex of `530 crore. Estimated completion deadline is Q3 of FY23. enhancement: ♦ Downstream Commissioning combo line for downstream expansion. 1.5 times expansion of Hot Rolled Annealed Pickled capacity and 1.7 times expansion of Cold Rolled Annealed Pickled capacity. These capacities are to be enhanced from 0.8 mtpa and 0.45 mtpa to 1.25 mtpa and 0.75 mtpa respectively at an estimated capex of `1,250 crore. Estimated completion is by Q4FY23. ♦ Backward integration: 1.4 times expansion of Ferro chrome capacity – from 0.25 mtpa to 0.35 mtpa to scale up backward integration and cost efficiency at an estimated capex of `315 crore. Estimated completion time is Q3 of FY24. Remaining capex will be expended on enhancing quality assurance for new generation grades in high-end segments, balancing of units, and other necessary improvement activities, the company said. JSHL brownfield expansion
JSHL is going for brownfield expansion to leverage its position in specialty products, through enhancing its product mix and augmenting market reach. The expansion of Specialty Products Division (SPD), with an estimated capex of `450 crore is planned to be rolled out in two phases. ♦ 3x expansion of Precision Strip capacity: This is planned to go from the current capacity of 22,000 tons per annum (TPA) to 60,000 tpa in two phases. It would strengthen the company’s presence in
segments such as auto, process industry, oil & petrochemicals, and also cater to niche segments like aerospace and electric vehicles. The estimated capex for the project is `250 crore and includes the earlier announced capex of `190 crore. After the first phase of expansion by Q2 FY22, the total capacity would stand at 48,000 tpa. ♦ 1.7x expansion of blade steel capacity: This will go from the current capacity of 14,000 tpa to 24,000 tpa in two phases. After the first phase of expansion by Q2 FY23, the total capacity would stand at 20,000 tpa. JSHL is among world’s leading razor blade steel producers with a majority market share, globally. The expansion will help further consolidate its position. Estimated capex for this project is `200 crore. “The expansion will enable us to foray into new and upcoming high-end segments like EVs and Aerospace. This transformation, along with an intensified approach towards digital manufacturing, would accelerate JSHL’s growth,” Jindal said. Merger impact
After obtaining necessary approvals from the stock exchanges and SEBI, JSL and JSHL have filed first motion application before the NCLT. The petition is expected to come up for hearing soon. “The impending merger with Jindal Steel Hisar will place JSL as the second largest stainless steel player in the world (ex-China). Besides, the product range will be broadened to more than 120 grades, imparting the company more operating flexibility and insulate it against cyclicality of the specific end-use sector,” Edelweiss Securities said in a report. JSL Q1 EBITDA up 6.5 times
JSL has increased guidance of EBITDA/ton to `18,000-20,000 from `15,000-17,000/ton earlier. “Going ahead, we believe our FY22 estimated EBITDA guidance of `24,50025,000 per ton against management’s
Steel Insights, August 2021
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