Jindal Steel & Power keen on RINL, NMDC's Nagarnar iron and steel plant

Having lost out in the race for Neelachal Ispat Nigam Ltd (NINL) – an asset owned by central and state public sector undertakings (PSUs) – Naveen Jindal-owned Jindal Steel & Power (JSPL) has eyes set on state-run Rashtriya Ispat Nigam Ltd and NMDC Iron and Steel Plant (Nagarnar).

End-January, Tata Steel pipped a consortium of JSPL and Nalwa Steel and Power and also, Sajjan Jindal’s JSW Steel for the 1.1 million tonne NINL in a Rs 12,100-crore bid. But JSPL is now looking at other growth options. In the acquisition space, it is keen on bidding for RINL and NISP, Nagarnar.

“We are interested in both the assets,” said JSPL Managing Director V R Sharma, adding that they were not yet on the table.

Strategic sale of RINL and NISP is expected. On January 27, 2021, the Cabinet Committee of Economic Affairs (CCEA) had given an in-principle approval for 100 per cent strategic disinvestment of government holdings in RINL. Prior to that, the Cabinet had approved the demerger of NMDC’s steel plant and strategic sale of the demerged steel company.

The two assets are bigger than the 1.1 mt NINL and would bolster steelmaking capacity for any buyer. RINL has a 7.3 mt capacity and NMDC’s steel plant is of 3 mt capacity. In addition, RINL’s advantages are that it is a shore-based plant with a large land bank. The NMDC steel plant, on the other hand, is in the iron ore belt.

JSPL is primarily focused on long steel products, typically used in construction and railway. So is RINL. But Sharma said that would not be a problem and flat products can be added there. It is a port-based plant and a very good facility, he said.

The NMDC plant on the other hand is into flat products, used in automobiles and domestic appliances.

But it’s not just upstream opportunities that JSPL is looking at. It has also thrown its hat in the ring for Indian Steel Corporation, a downstream unit, under the Insolvency and Bankruptcy Code (IBC).  

“We have submitted our expression of interest for Indian Steel Corporation. We visited also,” said Sharma.

The strategy for looking at downstream assets, Sharma said, is simple. “We are putting up a 5 mt hot rolled plant and for the first time we are entering into flat steel. So, we need downstream industry. It is easier to transport hot rolled coils than transporting finished goods. We want downstream facilities across India. Such acquisitions would be ready-to-use,” explained Sharma.

JSPL, which had stayed away from bidding for the larger steel assets under IBC in 2018, is now looking at acquisitions after having reduced debt. A strong steel cycle helped it reduced net debt from a peak level of Rs 46,500 crore in FY16 to

Rs 10,981 crore in Q3FY22. It now aims to be net debt free in FY23.

For its six-million-tonne expansion plan or acquisitions, Sharma said that it would be funded largely from internal cash generation. In the 9MFY22, JSPL recorded profit after tax of Rs 6,721 crore on gross revenues of Rs 40,752 crore.