Once-bitten-twice-shy JSW Steel has decided to bid for all the distressed large steel and downstream companies in future with the focus on evaluating their worthiness at the final stage.
Seshagiri Rao, Joint Managing Director, JSW Steel, said the company missed the opportunity to be in race for Essar Steel as it had not placed the expression of interest in the initial stage.
“At that time, we were pursuing Bhushan Power and Steel, Bhushan Steel and Monnet Ispat. We did not want to put our hands in every available assets then, but now we have realised the mistake,” he said.
Of course, he said this does not mean the company will be aggressive in bidding for all available assets.
Essar tale
Refuting the possible entry of ArcelorMittal disrupting the steel market with aggressive pricing strategy like Reliance Jio did in telecom sector, Rao said with huge domestic demand of 95 million tonnes a year, one player with 10 mtpa capacity cannot dictate and disrupt the industry trend.
JSW Steel expects to turnaround Monnet Ispat and merge itself within three years, providing an exit opportunity for its joint venture partner Aion Capital.
Typically, Rao said private equity investments look for exit after 3-7 years and in the case of Monnet, the exit will happen much sooner.
Enhancing capacity
JSW Steel, which has a market share of 15 per cent, plans to ramp up its production capacity from the planned 25 mtpa to 45 mtpa by 2030 when the country’s overall capacity is expected to treble to 300 mtpa. Currently, JSW Steel is increasing capacity from 18 mtpa to 26 mtpa with investment of ₹45,000 crore.
Alongside, the company will maintain its value-added product portfolio at 55 per cent to protect itself from the vagaries of steel prices.
Focus on value addition
Jayant Acharya, Director, JSW Steel, said the focus on value-added products will protect the company’s margin as it takes years to get approval for supplying these customised speciality products.
While expanding production capacity, Rao said the company will ensure backward integration of raw material and will not commit the mistake done earlier by expanding output without captive iron ore and coal allotment.