JSW Bengal Steel to double capacity

Sajjan Jindal-promoted JSW Bengal Steel is likely to double the first phase capacity of its project to six million tonnes as it has tied up the required raw material linkages.

Biswadip Gupta, joint managing director and chief executive officer, JSW Bengal Steel said three million tonnes would be onstream by March 2011 and six million tonnes would be operational by June 2011.

The investment in the first phase would be in the region of Rs 15,500 crore to Rs 18,000 crore. The total project would cost around Rs 35,000 crore.

The project would achieve financial closure in three months' time. It would be financed through a mix of debt and equity.

Gupta announced that JSW Bengal Steel would go for an initial public offering (IPO) but did not specify a timeframe. The IPO would give an exit option to the land owners who received free shares of JSW Bengal Steel as part of the compensation package.

The package has three components, employment for at least one person per family, compensation for land price (50 per cent cash and 50 per cent annuity) and free shares at-par equivalent to the land price. The company was on the verge of completing land acquisition for the project, with a mere 10-15 acres of private land still to be acquired. The total land requirement was a little less than 5,000 acres, of which 90 per cent was vested with the state government.

The project recently got clearance from the ministry of environment and forests.

JSW Steel's (the parent company's) 7 million tonne and 10 million tonne capacity enhancement at Bellary was running ahead of schedule. The same model would be emulated in Bengal as there were some common contractors working on both the projects.

JSW Steel has a target of achieving 30 million tonnes capacity by 2020.