Japanese firm JFE set to pick up 5-15% stake.

“We are in talks with the promoters [of Bramhani Steels], but I cannot comment on whether it will be an acquisition or a joint venture.” — Mr Sajjan Jindal, Chairman, JSW Steel

Mumbai: JSW Steel plans to invest Rs 75,000 crore over the next 10 years to ramp up capacity from 7.8 million tonnes per annum to 32 mtpa through greenfield and brownfield projects.

Mr Sajjan Jindal, Chairman, told shareholders at the 16 {+t} {+h} annual general meeting that the company was taking steps to infuse further equity and strengthen financials to kick off the next phase of expansion. JSW Steel recently raised Rs 2,000 crore by issuing warrants to a promoter group firm, mainly to reduce its debts which stood at Rs 16,000 crore last fiscal. The debt equity ratio was 1.69:1.

Japanese steel major JFE Steel is set to pick up 5 per cent to 15 per cent in JSW Steel, said Mr Jindal without committing on the timeframe involved to execute the deal.

JSW Steel has an alliance with JFE to produce high grade auto steel. “The alliance will help us supply steel to Japanese automobile companies setting up base in India,” he added.

On the possibility of a deal with Bramhani Steels promoted by the Karnataka Minister for Tourism and Infrastructure, Mr G. Janardhan Reddy, Mr Jindal said, “We are in talks with the promoters, but I cannot comment on whether it will be an acquisition or a joint venture. A definitive agreement has not been reached.”

Looking for assets

The company has achieved backward integration by acquiring coal mines in the US which have resources aggregating 123 million tonnes.

“In view of the stated objective of achieving 32 mtpa of steel by 2020, the company continues to look for even more raw material assets both within India and globally,” he said. Coal and mining leases in various regions within the country are in different stages of regulatory approvals. Mining activities will begin on receipt of these approvals.

Steel prices have fallen in the last few months mainly on account of de-stocking. This has led to a reduction in apparent demand while real demand for steel is still intact, Mr Jindal said. “Hence, far from being unduly worried, we actually feel that this would work out well for long-term stabilisation of prices,” he added.

The company's scrip on BSE was down 1.30 per cent at Rs 1,049 on Tuesday.