Road to insolvency: Despite setback, JSW Steel on asset-buying spree

Sajjan Jindal-led JSW Steel’s hopes of bringing in additional capacity through the buyout of companies undergoing insolvency resolution may not have fructified, but the company continues to look at investment opportunities in the domestic and overseas market. 

Last week, Jindal announced two investments of $600 million in the US. It is also looking at Europe for more investment. “Our plans for acquisition in Europe are on,” Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel, said. 

This is not the first time Jindal has been on an asset-buying spree. In 2010, the firm had acquired Ispat Industries at Dolvi followed by Vallabh Tinplate and Welspun Maxsteel in 2014. With this, JSW Steel grew from a 14.3 million tonne in 2011 to 18.1 million tonne. It is now on a definitive way towards a 40 million-tonne capacity steel producer by 2025. 

Though both the US investments indicate Jindal’s expansion plans, the announcements have come in at a time when US President Donald Trump has slapped high import duty on steel and aluminium to protect domestic industry. “The whole idea is to consolidate this facility (plates and pipes mill), which will bring steel manufacturing back in the US,” said Parth Jindal, director, JSW (US).  

Last week, the larger investment announcement in the US of around $500 million was for increasing capacity utilisations of its existing one million-tonne plant in Texas, while the other $81-million investment was towards acquisition of Acero Junction Holdings, a Delaware Corporation. 

The turnaround of its US plates and pipes mill took some time. Acquired in 2007, Jindal’s $1.2-billion investment towards the mills came under criticism for its timing and enterprise valuations. However, the company continued to own the plant not doing much for it. After a tough business journey for a decade, the Texas mill has got a breather as it got a road map chalked out to triple its utilisations by March 2020. 

JSW Steel was one of the aggressive bidders for companies undergoing insolvency proceedings. It is, however, likely to take control of only Monnet Ispat in a tie-up with AION Capital Partners. In the case of Bhushan Steel, the company has lost out the deal to Tata Steel, the country’s oldest steel producer. 

Notwithstanding the setback in bidding for the NCLT assets, Jindal is going all out to grab the low-hanging opportunities whether in domestic or global market, or whether green or brownfield expansion touching every corner of the matrix.

The company on Monday through a release said it had joined Nu Metal & Steel in submitting a binding bid for Essar Steel, which was under the corporate insolvency resolution proceedings.