The Proud Brand of India, Jindal Steel & Power

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Mr. Naveen Jindal, Chairman - JSPL
Mr. Naveen Jindal, Chairman – Jindal Steel & Power Ltd

Q. Where do you see Angul steel plant in next 5 years down the line?

JSPL (Jindal Steel & Power Ltd) achieved its highest-ever revenues in FY 2016-17 backed by the highest-ever steel production. With the substantial steel manufacturing capacity addition in FY 2017-18 after completion of Steel Plant at Angul, we would grow stronger and bigger with every passing quarter.

Over the next 5 years, JSPL’s 6 MTPA integrated steel plant will emerge as one of the country’s most efficient steel manufacturing facility. Most importantly, the operational efficiencies of Angul will play a significant role in the Debt Reduction roadmap of JSPL to be a relatively Debt-Free company over the next 4-5 years.

Q. With the new blast furnace operational at Angul, what kind of steel production expected this year?

The 4 MTPA Blast Furnace, the largest in India, has doubled JSPL’s domestic steel manufacturing capacities. During this fiscal we will focus on ramping up production at our Angul facility and aim to achieve 80% plus capacity utilization levels in 6-8 months. We aim to produce atleast 5.5 Million Tonnes of Steel during this fiscal in India, which will be 60% more than last fiscal.

Q. Who are the prospective buyers of Angul produce? Do you sell them in a competitive price, better than your rivals like Tata’s & others? (Could you please quote your price per tonne?)

In today’s hyper-competitive world, where supply-demand balances are not only dependent on domestic equations but also prone to global dynamics, market forces drive right pricing of each product category. What becomes paramount is to be the most cost-efficient producer in each of the category of steel we produce. That is the primary focus integral to the operational excellence philosophy practiced at JSPL.

The Integrated Steel Plant at Angul comprises of a 4 MTPA Blast Furnace and a 2 MTPA DRI plant. The 3 MTPA SMS facility further feeds the downstream 1.2 MTPA Plate Mill and 1.5 MTPA Bar Mill Units. We also have substantial capacities of global scale to produce semis. The price per ton of the diverse range of steel produce at Angul Plant differs substantially.

The Bar Mill caters to the robust demand for the Jindal Panther TMT Rebar range. The Plate Mill at Angul has capability to produce plates upto 5-metre width. The Plates produced at Angul are being used globally in critical applications like Oil & Gas pipelines, Shipbuilding, Pressure Vessels and a plethora of Industrial Applications, where longevity and durability over decades of useful life is paramount.

Q. What is total debt of JSPL till now? What is company’s strategy to reduce debt?

The cancellation of Captive Coal Blocks and payment of an additional levy of over Rs. 3300 crore had come as a big blow for JSPL & other companies in many ways. Firstly, we had to pay the huge amount of additional levy, made applicable since 1993 till 2014, within 3 months. In such a short time, we were left with no option but to take debt and make the payments under protest. That took our consolidated debt to Rs. 46000 to 47000 crore levels, and added a significant amount to the interest outgo.

Our domestic steel assets carry a debt of Rs. 24000 crore levels, which is not too high considering the size and scale of assets. The power business under Jindal Power Ltd. with a generation capacity of 3400 MW has a debt of around Rs. 8000 crore. The balance Rs 14,000 crore debt is linked to our global operations that include a 2 MTPA Integrated Steel Plant at Oman and Coal Mining operations of 6.2 MTPA spread across South Africa, Australia and Mozambique.
Today as we speak, all our capacity expansion projects have been successfully completed, without taking any additional debt during FY 2016-17. The focus is now to sweat these assets of global scale to optimum levels. The cash generated over the next 3-4 years will reduce the current debt levels substantially.

Q. As the company was in talks with few players to sell assets, are you still mulling any plan to sell stakes in Indian operations to cut debt? Is there any plan to sell stake in the company’s Oman unit?

JSPL is in the business of selling steel not steel plants. We do keep getting inquiries from multiple players for our world-class assets on a regular basis. We value our assets, and we will continue to nurture them with the same dedication and commitment we have built them over the years. We are open to looking at equity investors partnering in the growth of JSPL at a fair value.

Q. When do you expect the deal with JSW for your power plants be done finally? Is it not taking too much time? What are the issues involved in this regard?

The deal with JSW Energy for sale of a 1000 MW power generation asset at Tamnar is progressing at the desired pace. We aim to consummate the agreement within the given time frame in 2018.

Q. Lastly, could you please give quick comments on steel market going forward?

India has a huge latent demand for steel for its Infrastructure-creation roadmap. Today, the per capita consumption of steel in India stands around 60 Kg as against the global average of 217 Kg. We do not see any major issues on either the demand front nor the supply aspects. The most important issue that India has to address is by bringing the duty, royalty and taxation regime for ores at par with global steel producing nations. Likewise, some major steps need to be taken to reduce logistics costs and turnaround times. With the Government all set to give preference to “Made In India” steel for India’s infrastructure creation, we are confident that the much needed policy initiatives to boost the intrinsic strength of domestic steel sector would be implemented in the coming months.

Q. What is your view on the GST regime?

GST is a progressive step that would strengthen the economic fabric of India. The taxation on steel and power sector gets simplified and rationalized to a certain extent. Ultimately, a uniform GST regime is Good for the Country and Good for JSPL.

Q. How do you think will JSPL participate in the forthcoming growth of steel sector in line with the National Steel Policy targets of 300 MTPA by 2030?

At this point of time JSPL has created substantial capacities that can cater to the emerging demand for “Made In India” steel. We aim to swear these assets to the optimum levels before embarking on further expansion plans.

Some of our unique product range like Head Hardened Rails, which till now are being imported, can effectively address the rapid creation of Metro and High –Speed trains which are key emphasis areas identified by the government. Likewise, being the country’s only private sector producer of Rails, we aim to participate in the exciting expansion plans of the Indian Railways. With a 1 MTPA of Rail Manufacturing capacity, JSPL can emerge as a reliable source of Rail Tracks in the country’s railroad plans.

Similarly, JSPL’s range of Plates, Beams and Structural Steel products can substitute the current imports substantially to contribute to the success of the Make In India initiative.
By 2030, we would aim to have a higher share of domestic steel production capacity than the levels at which we stand today.

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