Jindal Stainless plans to invest Rs 15 billion to expand capacity

Company says, with all the infra already available at its Kalinganagar unit, the incremental cost for pursuing expansion will be lower

Leading stainless steel maker Jindal Stainless Ltd plans to invest Rs 15 billion to expand the capacity of its Steel Melting Shop (SMS) from 0.8 to 2.2 million tonnes per annum (mtpa) and double its cold roll mill capacity from 0.8 to 1.6 mtpa.

“We are seeking environment clearance for 2.2 million tonne per annum (mtpa) of the SMS. Without much investment, we will reach 1.1 mtpa by next year and 2.2 mtpa in another two years. We will be expanding in two phases. Though we've sought approval for 2.2 mtpa, we're looking at an operational capacity of 1.6 mtpa,” a company source said.

However, the expansion of the SMS will depend on the behaviour of the market, he added.

With all the infrastructure already available at its Kalinganagar facility, the incremental cost to the company for pursuing expansion will be lower.

Separately, Jindal United Stainless Ltd (JUSL), which will be hived off as a separate company after the planned de-merger, is planning to double hot strip mill to 3.2 mtpa and add a cold rolling mill, at a total outlay of Rs seven billion. “We are seeking environment clearance for the hot strip mill capacity ramp up. The date for public hearing is expected to be notified soon. The capacity upgrade for the mill can be done with a Rs 2-3 billion investment. Plans for cold rolling mill are almost firmed up,” the source informed. 

The cold rolling mill will meet the needs of the aviation sector, OEMs (original equipment manufacturers) and the auto sector.

The cold rolling mills owned by Jindal Stainless Ltd and JUSL will cater to different market segments. With their unique and differentiated portfolio of products, there will be no competition or cannibalisation between the two facilities, the source said.

The Kalinganagar unit produces all grades of stainless steel and exports to Europe and South East Asia. “Exports have 25-30 per cent share in our volume sales. Our priority is to meet the demand generated by the domestic market,” said the official.

The expansion plans by both entities will be met through internal accruals, without creating any debt.