The O P Jindal group company Jindal Steel and Power Ltd (JSPL) has drawn up projections to raise profits from Rs 101 crore in 2000-01 to over Rs 365 crore in 2003-04 and over Rs 700 crore in 2004-05. "We will be making a profit of over Rs 1 crore a day in 2003-04 and over Rs 2 crore a day the year after," executive vice-chairman and managing director Naveen Jindal said.
Jindal expects the additional profits to come from the investments being made by the company. The first off the block is the new 55 mw power plant that has been put up by the company at Raigarh in the state of Chhatisgarh for Rs 225 crore.
Though it was scheduled for completion in March 2002, it is going to commence production later in the month. The company will sell the power to the western grid at Rs 2.30 per unit. "As the states in the region are deficit in power, we foresee no difficulty in selling the power," Jindal said. JSPL is going to follow it up with another 55 mw plant at Raigarh at a cost of Rs 180-190 crore.
The company is also putting up a mini blast furnace at the site of its sponge iron plant at Raigarh. Set up at a cost of Rs 90 crore, the furnace is expected to be operational by March 2002. "This will represent a big saving for the company," Jindal said. Apart from sponge iron, the company has started producing value-added products such as alloy steel rounds and HT grade slabs.
By June 2002, the company's rolling mill is also expected to be up and running. With a capacity of 750,000 tonne per annum, it will make rails as well as beams and structurals. The project cost is Rs 400 crore and is funded equally out of internal accruals and debt. Jindal disclosed that the financial closure of the project is expected to happen within a couple of months. "This mill is comparable to the best in the world. So far the rails made in the country are of 13 metres. Our rails will be of 120 metres," Jindal said.
The Railways is expected to increase its annual procurement of rails from around 450,000 tonne per annum to almost 700,000 tonne on new projects as well as replacement of old rails. JSPL expects to corner a sizeable chunk of the orders.
Rails sell at a substantial premium to other steel products like hot rolled coils. The impact of all the ongoing expansions will be felt fully on the company's 2003-04 balance sheet.
