Naveen Jindal-promoted Jindal Steel and Power Ltd (JSPL) — among the largest steel producers in India — is in talks for a stake in Andhra Pradesh-based Steel Exchange India Ltd.
Those aware said JSPL has put in a letter of intent expressing interest in available assets of Steel Exchange India.
Steel Exchange India makes TMT bars under the brand name Simhadri TMT. In FY22, it reported a net profit of ₹116 crore and a revenue of ₹1,200 crore.
“JSPL continues to evaluate strategic opportunities on an ongoing basis as and when they arise,” a company spokesperson told businessline:
Those aware said the discussions were at an early stage and JSPL “just” sought details of the assets that are on the block.
Proximity to port
Steel Exchange India can produce 0.25 million tonnes per annum (mtpa) of TMT bars, and this capacity can be scaled up to 1 mtpa. However, its proximity to the Vizag port, Vizag Sea Port and Gangavaram Port is seen as a key proposition.
The company’s integrated steel plant has its own electrified private railway siding with three lines, which means two rakes can be unloaded simultaneously. The railway siding is on the Kirandul dedicated iron ore railway line and connected to the Kothavalsa junction on the main line.
Corporate restructuring
Steel Exchange India mentioned in its FY22 annual report that during the year the management had evaluated options for corporate restructuring to re-align the business vertical.
Post the implementation of a one-time settlement with a consortium of banks during Q4FY21, and after raising funds through compulsorily convertible debentures and warrants, the company was “assessing (its) core strengths and assets” to start logistics business as part of a corporate restructuring strategy.
In FY23, an assessment of “underutilised and un-utilised infra assets” was underway to unlock value “by way of new logistics and warehousing services business” that can complement and add value to existing operations.
Nellore plant
JSPL has prepared a detailed project report for a 2.25-mtpa integrated steel plant in Nellore (Andhra Pradesh), at a planned investment of ₹7,500 crore, sources said.
The State Investment Promotion Board has also approved the allotment of 860 acres of government-owned land adjacent to Krishnapatnam Port to a JSPL subsidiary.
The port-led project eyes iron ore sourcing either from Karnataka or Odisha. Construction and other commercialisation is expected in two-odd years, after approvals.