Mining News Pro - India’s one of the largest integrated steelmakers, JSW Steel will be focusing on organic and inorganic growth strategies, in an effort to strengthen its business as mentioned by company’s chairman and managing director, Mr. Sajjan Jindal during the company’s shareholders meet for the annual report of 2017-18.
While inorganic growth strategy includes mergers and acquisitions, organic growth is usually achieved by increasing output and enhancing sales internally.
In the recent past, JSW Steel has missed out on some strategic acquisition deals including that of Bhushan Steel, Bhushan Power and Steel, and Italian steel major Ilva SpA. Thus, company’s future strategy will focus on buying more niche, lower capacity plants which do not require huge investments to turn around.
JSW Steel’s inorganic growth strategy
Inorganic plans of the company for the domestic market include buying stressed assets through NCLT, and towards that end, it has tied up with Numetal, which is co-promoted by the Essar Group to buy Essar steel.
In consortium with a financial partner, the JSW Steel has also emerged as the preferred bidder for acquiring Monnet Ispat’s 1.5 MTPA steel making facility in Chhattisgarh and this acquisition will also be crucial in strengthening company’s footprint in the markets of central and eastern India.
In the international market, JSW has recently acquired relatively smaller steel plants, Acero Junction Holdings for USD 80.85 million in U.S. and Italy’s Aferpi for 55 million euros. It is now also looking out for similar-sized plants in Europe.
JSW has proposed to invest USD 500 million in phases to convert U.S.’s Acero Junction Holdings flat steel making facility into a fully integrated 3 MTPA steel-making capacity.
It has also signed the MoU (Memorandum of Understanding) to consider an investment of up to USD 500 million in phases at its Plate & Pipe Mill facility in Texas, U.S., which are directed towards capability enhancement as well as backward integration to set up about 1 MTPA hot-end facility.
JSW’s Organic growth plans
In terms of organic growth strategy, JSW Steel plans to make a capital expenditure of INR 45,000 crore by FY21 to expand capacities at Vijayanagar and Dolvi units and modernise and expand capacities of downstream businesses. With these expansions, JSW will increase its overall steelmaking capacity from 18 MTPA to 24.7 MTPA by March 2020. It is investing 268 billion rupees ($3.9 billion) over the next three years to complete its expansion.
By 20230, the company plans to increase its capacity to 40 MnT in India and 10 MnT overseas (from the current level of 4 MnT).