Jindal Stainless eyes fresh Asian buyouts

Move part of backward integration into raw material space

Jindal Stainless, close on the heels of acquiring an Indonesian unit, is eyeing further buyouts in Asia for backward linkages.

Sources said the company was on an expansion mode and would endeavour to become competitive by having access to raw materials. "Any joint ventures or acquisitions would be in the raw material space and could be in the domestic or international market" they added.

Prices of raw materials such as iron ore, manganese have been revised by 60-70 per cent this year. Acquisition apart, the company had also lined up a Rs 950 crore ferro chrome project in Orissa for backward linkages. However, a case against the project was pending in the Supreme Court and may come up for hearing towards the month-end.

Jindal Stainless was weighing the option of expanding its newly acquired Indonesian plant from 50,000 tonne to 100,000 tonne. The investment for the expansion could be $20-$25 million.

Also, the company was expanding its plant at Hissar. The cold rolling capacity was being enhanced from 90,000 tonne to 250,000 tonne for an investment of Rs 400-450 crore.

Sources said, to feed the enhanced capacity of the company's plants raw material supply would have to be lined up. A smooth raw material supply at competitive prices was key to the company's competitiveness and, hence, the acquisition strategy.

However, sources clarified that the company was currently not in buyout talks.

Acquisitions in the international market would be in Asian continent as this was identified as the growth region. "India and China will be the growth drivers," they said.

The demand in the region for two-three years would be buoyant. In India, the 6 per cent growth in construction was an indication that the boom would hold for the next few years.

In anticipation of the boom in the Indian economy, Jindal Stainless had embarked on the expansion drive. The company was expecting significant improvement in its bottomline as a result of the expansion. The company planned to list its foreign currency convertible bonds (FCCBs) on the Luxembourg Stock Exchange. Jindal Stainless had issued $60 million FCCBs last December.