Jindal Stainless lines up Rs 1,300 crore investments

JSL has undertaken expan
21 July 2004

Mumbai: Jindal Stainless Ltd (JSL), the leading domestic stainless steel producer, is on an expansion spree. The company has lined up over Rs1,300 crore investments in the coming two-three years. It is building additional capacities and also setting up new plants. The company is also looking at acquiring facilities abroad.

JSL has undertaken expansion of its facilities at Hisar at a cost of Rs400 crore. This investment is being funded entirely through internal accruals. The Hisar expansion is likely to increase volumes by 15 per cent in FY05.

Also on the anvil are a 240,000tpa ferro alloy plant and a 300,000tpa coke oven battery in Orissa for which JSL has been allotted land at Duburi. The ferro alloy plant is expected to be completed by June 2005, while the coke oven battery is expected to be completed by March 2006.

This project is estimated to have total of Rs900 crore investment. It is expected to be done by a mix of debt and equity in 2:1 ratio. The company is likely to raise around Rs600 crore debt of which Rs200 crore has already been tied up at a rate of 6.9 per cent for 10 years.

The company is also acquring plants overseas and is in the process of acquiring a cold roll facility in South-east Asia region.

Market analysts say that though the effective cost of debt decreased substantially (from 8.5 per cent at beginning of year to 5.5 per cent), the absolute amount of interest is likely to increase in FY05E due to an additional off-take of debt for the Orissa plant as well as decrease in forex gains.