JSW Steel aims to reach 50 million tons by 2030

2018-06-08

Jun. 08, 2018 - After the successful acquisition of Italy's Aferpi, and the winning bid for Monnet Ispat in the domestic market, JSW Steel is looking for more distressed assets in India and overseas.

This is part of the company's larger roadmap to reach 50 million tons in annual capacity by 2030.

"The plan is to have 40 million tons of capacity in India, and the rest overseas," a senior official said.

JSW Steel signed up the deal to buy Aferpi last month, adding two million tons to its total capacity. At Rs 441 crore, the company's facilities that supply specialised steel to the auto industry have come cheap.

In March, JSW Steel acquired US-based Acero Junction Holding, whose facility include a 3 million ton hot strip mill producing steel for white goods and auto industries. Analysts valued the acquisition at $155 EV/ton, much cheaper than what the company would incur otherwise in setting up a similar facility.

The acquisition will add to JSW's plates and pipes making assets in the US. Located in Texas, the facility is being expanded and will now include a steelmaking unit with a capacity of one million tons a year.

A source in the industry added that the company is evaluating more distressed assets in the US and Europe. "Talks are on with another steel company in Europe," said the executive.

"The strategy to look for such assets is because the company don't want to buy assets at higher value, which would eventually stretch the balance sheet," said the senior executive cited above.

The steelmaker's debt to EBITDA ratio stands at 2.75, and the company wants to keep it below 3. And net debt to equity ratio is 1.38.

The company's net debt reduced to Rs 38,019 crore as on March 31, 2018, from Rs 42,068 crore in December 31, 2017.

The Jindal company is now instead focusing on Usha Martin's specialty steel business, which has been put on the block. The unit is backed by captive iron ore and coal mines. Vedanta Resources is also said to be interested in the asset.

JSW Steel, which at present has a capacity of 18.1 million tons in India, plans to increase its capacity by nearly 40 percent in two years, taking its volume to 24.7 million tons by 2020.

The company's capacity could even reach the 40-million-ton mark in another three years, as it plans to further expand capacity at its facilities at Vijayanagar in Karnataka, and has drawn up a plan to set up a new facility in Odisha.