JSW Steel plans to float Rs 400 cr rights issue

The company plans to part-fund its cold-rolling mill in Vijaynagar via the issue proceeds.

JSW Steel will float a rights issue of Rs 400 crore to part-finance its one million tonne per annum new cold rolling mill complex in Vijaynagar, Andra Pradesh, said the company's vice-chairman and managing director Sajjan Jindal.

Besides the rights issue, the company is taking the debt route to raise the rest of the Rs 1,000 crore fund required for the mill to be commissioned by March 2007.

JSW Steel is also investing about Rs 5,000 crore to upgrade the capacity of its steel plant from 3.8 million tonne to seven million tonne a year. The plant will go onstream by March 2009.

The entitlement of the rights will be in the ratio of one equity share of every eight shares held. Every share allotted on rights basis will also have two attached warrants "" one convertible into a equity share between 18 months and 36 months and another convertible between 24 months to 48 months.

The second largest speciality and carbon steel manufacturer in the private sector also announced that it is scouting the US and European markets to acquire 'stress assets,' said Jindal.

"We plan to increase the slab capacity of the company, for which we are looking to acquire stress assets in the European and American markets. It should be done within three months," he added.

At present, the company produces 2.5 million tonne of slab products and exports about 45 per cent of it. "The biggest markets for these products are in the developed countries. So, the new plants will help in catering to the markets better," said Seshagiri Rao, director, finance.

"We will source half finished slab products from our plants in India, export them to the unit abroad and make them value-added finished goods," he added.

The company is in negotiations with one or two proposals and expects to increase its capacity by one million tonne a year after the acquisition.