Naveen Jindal's JSPL to break even from Angul operations in October

Naveen Jindal promoted Jindal Steel & Power Ltd (JSPL) expects to break even from its Angul steel plant operations from October this year with the successful commissioning of the blast furnace that has taken the plant capacity to six million tonne per annum.

With the blast furnace commencing operations, JSPL has also planned to go for temporary shutdown of its loss making coal gasification based-DRI plant which is running at a depleted capacity.

“I hope from October, we will be breaking even from the Angul plant. From July, we hope that we will be doing much better and we will be producing 0.2 million tonne of steel every month. The blast furnace has started to produce and everything is going on well. This year, we hope to produce six million tonne of steel in India and more than 1.5 million tonne in Oman, so we will be producing more than 7.5 million tonne”, said Jindal, chairman of JSPL.

On the coal gasification unit, he said, it had suffered a lot of damage due to a fire incident about a year ago. The unit is currently running at less than 50% capacity.

The coal gasification based DRI plant along with the CGP (co-generation plant) will undergo a transient shutdown for four months with the blast furnace starting operations.

“In the next four months, we would completely rebuild it (the coal gasification unit), modify it and then start again from October and when we start, we hope to make it profitable”, said Jindal.

JSPL's coal gasification plant, the only of its kind, had turned unviable since the company was banking largely on imported coal supplies. The steel maker imports 100% of its coking coal requirement and almost 50% of the coal needed for power generation.

“For coal supplies, we have a deal with MCL (Mahanadi Coalfields Ltd) but MCL has a lot of challenges. These challenges have to be overcome and MCL's production has to go up. I hope that in the future, coal availability improves at least for power generation”, said the JSPL chairman.

JSPL is betting on the Angul steel complex to stage its turnaround. The steel company is highly leveraged with a consolidated debt of about Rs 46,000 crore. It expects to become relatively debt free over four to five years with the Angul steel project playing a key role in paring debt.

“The reason why he had high debt at JSPL is that we had to borrow a lot to pay additional levy of Rs 3,500 crore after the cancellation of our coal block in 2014. We are paying interest on it. But, in the next four to five years, we hope that we will be relatively debt free. Its very important to have a good balance sheet”, said he.

JSPL's six million tonne steel mill at Angul will focus on speciality downstream products to cater to the requirement of both domestic and overseas markets. The company is already making the widest plate mill of five metres width that can find applications in ships, tanks and defence tankers. JSPL is manufacturing the longest rebar mill (1.5 metres) at Angul and plans to produce special grade billets for exports and also for despatches to its Jharkhand unit.

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