looking forward to an efficiency enhancement in its manufacturing units, one of the major steel producers of India, Jindal Steel & Power ltd (JSPl), is hopeful that Angul steel plant will help JSPl make a debt-free firm in the next 4-5 years and will contribute a lot in the financial turnaround of the company. Besides, the company has also set a production target of 4.5 lakh tonnes till August this year and aims to reach the rated capacity of 4 MTPA in the next fiscal as well.
Recently, JSPl commissioned the four million tonnes per annum (MTPA) steel capacity at the Angul facility in Odisha, taking the newly-built facility to the total steelmaking capacity of 6 MPTA. As far as the total steel capacity of the company is concerned, the steelmaker is expecting to produce around 11 million tonnes per annum, registering it as the fourth largest steel producers in the country after JSW, SAIl and Tata Steel.
“JSPl’s 6 MTPA integrated steel plant at Angul will emerge as one of the most efficient steel manufacturing facilities in the country. Most importantly, the operational efficiencies of Angul will play a significant role in the debt reduction roadmap of JSPl to be a relatively debt-free company over the next 4-5 years,” JSPl Chairman Naveen Jindal told The Pioneer in an interview.
Despite the grim situation in the steel sector in the country, JSPl achieved its highest-ever revenues in FY 2016-17, backed by the highest-ever steel production. The company’s revenue during January-March this year increased to Rs 6,765.07 crore as against Rs 5,549.84 crore in the corresponding quarter of previous fiscal. “With the substantial steel manufacturing capacity addition in FY 2017-18 after completion of steel plant at Angul, we would grow stronger and bigger with every passing quarter,” he added.
JSPl with over 5,000 workforce in its Angul facility, has installed 4,554 cubic meter size blast furnace at the same steel complex with 4 MTPA sinter plant, 2 MTPA coke oven, 3 MTPA steel melting shop, 1.2 MTPA plate mill, 1.4 MTPA bar mill and a 810 MW captive power plant.With global leader Primetals UK providing the modern steel-making technology, the blast furnace is designed to use 100 per cent pellets and high ash coal blended with coke up to 15 per cent adding to the cost competitiveness of steel produced by the JSPl.
On debt front, the steelmaker recently suffered a big blow following the cancellation of captive coal blocks and payment of an additional levy of over Rs 3,300 crore. In order to get relief from this burden, the company had to follow multi-pronged strategy in short span of time. “Firstly, we had to pay the huge amount of additional levy, made applicable since 1993 till 2014, within 3 months. In such a short time, we were left with no option but to take debt and make the payments under protest. That took our consolidated debt to the Rs 46,000-47,000 crore levels, and added a significant amount to the interest outgo,” Jindal said.
Revealing the total debt breakup, the company has said its steel assets carry a debt of Rs 24,000 crore level, which is not too high considering the size and scale of assets. The power business under Jindal Power ltd with a generation capacity of 3,400 MW has also a debt of around Rs 8,000 crore. The balance Rs 14,000 crore debt is linked to its global operations that includes a 2-MTPA integrated steel plant at Oman and coal mining operations of 6.2 MTPA spread across South Africa, Australia and Mozambique.
With a hope to cut the debt level substantially, Jindal said, “Today as we speak, all our capacity expansion projects have been successfully completed, without taking any additional debt during FY 2016-17. The focus is now to swear these assets of global scale to the optimum levels. The cash generated over the next 3-4 years will reduce the current debt substantially.”
As per the company, it has already invested around Rs 33,000 crore at the Angul complex till date, in which about Rs 24,000 crore was debt with the interest payout estimated at about Rs 200 crore per month. “We hope the newly installed 4-MPTA steel unit will start contributing to interest payout from July onwards,” said a senior company official at Angul.
The company was already operating a two-MTPA unit at Angul since 2015, which produced steel through coal gasification-direct reduced iron (DRI) route. With the new blast furnace at Angul, which is already operational now, the company, however, expects its steel production to be achieve dat 80 per cent plus capacity utilization levels in the current fiscal. “The 4 MTPA blast furnace, the largest in India, has doubled JSPl’s domestic steel manufacturing capacities. During this fiscal, we will focus on ramping up production at our Angul facility and aim to achieve 80 per cent plus capacity utilization levels in 6-8 months. We also aim at producing at least 5.5 million tonnes of steel during this fiscal in India, which will be 60 per cent more than last fiscal,” Jindal added.
As far as the current steel production at Angul is concerned, the company is stepping up its capacity gradually. JSPl has also set a production target of 4.5 lakh tonnes till August this year and targets to reach the rated capacity of 4 MTPA in the next fiscal. Explaining the production strategy, Executive Director and Angul Pant Head DK Saraogi said, “We have set our target 1 lakh tonnes in June, 1.5 lakh tonnes in July and 2 lakh tonnes in August, and we hope to reach the targetted capacity of 4 MTPA in the next fiscal.”
As per the National Steel Policy 2017, India envisages of producing 300 million tonnes of steel by 2030, though at present it produces only 90 million tonnes per annum. The Government is making its allout effort to increase the production in some way or the other, but many challenges have to be overcome on the path to the target. However, the JSPl said the total 6 MTPA steel unit at Angul required about 11 million tonnes of iron ore annually. “A small chunk about 1.5 million tonnes will come from the company’s own mine at Tensa in Sundergarh district, while the rest will be procured from the market,” it said.
