Jindal Stainless signs MoU with Tata Steel Mining; stock advances 10%

The MoU is signed with an aim to jointly unearth the chrome ore locked up in the boundary between our mines located in Odisha

Shares of Jindal Stainless Limited (JSL) advanced 10 per cent at Rs 135.40 on the BSE in the intra-day trade on Thursday after the company signed a memorandum of understanding (MoU) with Tata Steel Mining (TSML).

"The MoU is signed with an aim to jointly unearth the chrome ore locked up in the boundary between our mines located in Sukinda of Jajpur district, Odisha," JSL said in a statement.

It added: This would help conservation of chromite ore which otherwise would have been left unmined forever. This is a win-win-win partnership for the State of Odisha, TSML and JSL. Both the companies would now initiate steps to get necessary statutory approvals from concerned authorities before jointly starting mining operations..

JSL is the largest manufacturer of stainless steel in India with a capacity of 1.1 MTPA. The plant comprises ferro-alloy facilities with world-class technology and equipment. The manufacturing complex, equipped with a captive power generation facility, is eventually scalable up to 3.2 MTPA of stainless steel production.

Tata Steel Mining (TSML, formerly known as TS Alloys Ltd) is a 100 per cent subsidiary of Tata Steel. The company is working to develop commercial mining opportunities in addition to ferro alloys business.

In the past three months, the stock of JSL has zoomed 75 per cent, as against a 10 per cent rise in the S&P BSE Sensex.

Separately, rating agency India Ratings and Research (Ind-Ra), on July 17, had upgraded JSL's long-term credit rating to ‘IND A+’ which is three levels up from its earlier rating of ‘IND BBB+’. The short-term credit rating of the company has also been upgraded to ‘IND A1+’.

The key reasons for the upgrade include accelerated deleveraging, supported by the prepayments of debt, which was originally scheduled to be repaid over FY22-FY23, in FY21 along with a strong operating performance. The rating also factors in the benefit of proposed amalgamation, coupled with strong group linkages considering the same line of business along with strong operational, strategic, and financial linkages.

Ind-Ra expects JSL's business and financial profile to largely sustain post the merger, supported by the industry-leading scale of operations and similar financial metrics, further augmented by the benefits of scale and greater financial flexibility.