The OP Jindal group is planning to hike its stake in Jindal Praxair Oxygen, the 76:24 venture with Praxair of US, where it holds a minority stake. Jindal Praxair was initially a 50:50 venture, but the Jindals had diluted their stake owing to a resource crunch.
Senior group executives said, "We are looking at increasing our stake back to 50 per cent in Jindal Praxair once our cashflow from Jindal Vijaynagar Steel improves. We will soon be approaching the lenders for approval."
The joint venture had set up the captive oxygen plant for JVSL's 1.6-million-tonne hot-rolled coils project at Toranagallu, near Bellary in Karnataka. Besides, the venture also supplies nitrogen and argon apart from oxygen to JVSL as well as third-party customers.
According to analysts, JVSL focus on backward integration could yield healthy results in the future. Its pellet project is expected to reduce its cost of production by Rs 900-1,000 a tonne. On the other hand, the company's plans to enhance its mining capacity will also contribute to its bottomline.
Meanwhile, with the commissioning of its corex II unit, JVSL looks confident of catching up with Tata Steel in terms of cost of production and to that effect has outlined plans to bring costs down to $154 per tonne levels.
JVSL is one of the three steel companies in the world that operates on the Corex technology. Posco of South Korea, the lowest cost producer in the world, and Saldanha of South Africa are the other two companies.
During the last fiscal, JVSL has managed to curb its losses by 66 per cent at Rs 50 crore against a net loss of Rs 148 crore in the previous year. Lower net sales realisations had been the main cause of the reported loss.
