JSW's auto-grade steel plant in Bellary to go on stream by Dec

Expects $2 billion revenues from the unit once it reaches full capacity

JSW Steel’s auto-grade steel plant, which is coming up at Toranagallu in Bellary district of Karnataka, will be commissioned by the end of December, according to chairman and managing director Sajjan Jindal.

The downstream, value-added product manufacturing plant, specifically designed to cater to the requirement of the Indian automotive industry, is being set up with an investment of $1 billion.

“The 2.3-million tonne-a-year capacity plant, once commissioned, will substitute the auto-grade steel imports. We are in talks with all the auto majors and most of them have already approved the product quality also. We expect the unit to generate revenues of $2 billion and an Ebidta of $500 million once it attains full capacity utilisation,” he told mediapersons here Thursday.

Automobile companies import 3-4 million tonne of auto-grade steel every year at a cost of $800-1,000 a tonne.

JSW already operates a steel plant at Bellary with an installed capacity of 10 million tonne a year. This, however, is running at 70-80 per cent capacity utilisation as the company neither has captive iron ore mines nor any long-term supply agreement in place. It, at present, is sourcing the raw material from the open market.

Jindal said the company was suffering owing to loss of capacity due to iron ore supply problems. The company, he said, was already importing 100 per cent coal and it was difficult to import both the raw material.

“Furthermore, the plant is located in the hinterlands and it is logistically impossible to bring in so much of raw material. However, the Karnataka situation is getting better now as the Supreme Court has already given its comprehensive plan, which we expect to be implemented in toto in the next 6-9 months. Once done, the plant will run with full capacity,” he said.

Stating that the company was facing a similar iron ore supply problem in West Bengal, where it proposed to set up a 10-million tonne-a-year capacity plant with an outlay of Rs 35,000 crore, Jindal said until that problem was resolved, they would not be able to take the project forward.

“We cannot commit huge investments without raw material supply. The state government is working with the Centre to get iron ore mines allocated to West Bengal, to be used by the steel industry,” Jindal said while refusing to comment further.