Jvsl Vishnupriya Buy Soon

Jindal Vijaynagar Steel is close to acquiring the ailing Nandyal (AP)-based Shree Vishnupriya Steel. Financial institutions, whose money has been blocked by both the companies, had proposed last year that the Jindals acquire the company due to its proximity to JVSL's plant.

M V S Sheshagiri Rao, director-finance at JVSL, told Business Standard, "We are currently in the closing stages of our due diligence in Shree Vishnupriya Steel. The synergies between Vishnupriya and our unit is being studied and we will take the final decision soon."

Vishnupriya has a substantial debt component apart from a fund requirement to complete its 2.25 lakh tonne cold-rolled coils project. The downstream unit will add significant value to JVSL's hot-rolled coils, and margins will be higher.

 

Once the final call on the acquisition is taken, JVSL will shift the 2.25 lakh tonne unit to its own 1.6 million tonne HRC project near Bellary in Karnataka.

According to Rao, this is in view of availability of cheap power at its complex and usage of corex gas would also substantially save costs. At the same time, there would be a substantial savings in the freight costs as well.

After the commissioning of JVSL's corex II module, the company's cost of production has dipped to $177 per tonne compared with $200 per tonne before May, 2001. JVSL target is to touch the $148 per tonne level within the next 2-3 months, Rao said.