Jindal Stainless weighs SE Asia steel plant buyout

Region seen as next growth engine for the sector

Jindal Stainless is looking at acquiring a stainless steel plant in South East Asia.

Official sources said the downstream rolling plants were typically mid-sized with a capacity of one lakh tonne to two lakh tonne. The company envisages South East Asian countries to be the next big growth markets.

Among the other options being weighed is entering into long-term sourcing arrangements with these steel plants. Ideally, Jindal Stainless is looking at Thailand, Indonesia and Malaysia for growth opportunities. Sources said the growth rate in South East Asia is expected to be in excess of 12 per cent.

The company is evaluating some offers from steel manufacturers in South East Asia. There is, however, no specific timeframe for the proposals to materialise.

Jindal also expects domestic demand to pick up in the coming months. The Commonwealth Games scheduled for 2010 in Delhi will boost demand. A new state-of-the-art stadium will be built and the existing ones will also be refurbished.

Similarly, airports were also being planned for Bangalore and Goa, which implied greater opportunity for Indian steel makers. The present stainless steel production in the country is at one million tonne which is projected to grow to 1.4 million tonne in 2004.

Comparatively, China's production will stand at four million tonne. The main drivers for growth in the home market will be Indian Railways, metro, architecture, building and construction.

To encash on this growth in the domestic market, Jindal is bracing up to increase capacity in India. The company is setting up an 8,00,000 tonne per annum stainless steel melting facility along with a 1,60,000 tonne per annum ferro chrome facility in Orissa.

Jindal Stainless is also looking at tying up raw material ends, and had applied for acquiring chrome ore mines with the aim of becoming cost competitive.