Covid, legal tangles throw spanner in JSW bid to regain pole position
With the acquisition of Bhushan Power & Steel hanging fire and the expansion of Dolvi Works under a Covid cloud, JSW Steel’s move up the league table of Indian steel producers is now delayed.
With an installed capacity of 18 million tonnes, JSW Steel is the thirdlargest steelmaker. Public sector steel major Steel Authority of India (SAIL) has an installed capacity of 20.3 million tonnes, confirmed company executives while Tata Steel is at 19.6 million tonnes. Tata Steel figures include Tata Steel standalone, Tata Steel BSL and Tata Steel Long Products.
JSW Steel’s growth — through organic and inorganic routes — would have restored its position as the largest steelmaker in India this year but the plans are delayed for different reasons.
The acquisition of BP SL, having a capacity of three million tonnes, is caught in a legal web and will now be heard in Supreme Court. The five-million-tonne expansion at Dolvi, on the other hand — supposed to be completed in June — had to be postponed because of Covid.
JSW Steel mentioned in its annual report that it had received permission to restart activities towards the end of April 2020. However, the expansion project was hampered as a number of workers employed by contractors began to head home.
“Further, non-availability of foreign experts (from our technology and equipment suppliers) due to international travel restrictions is also impacting the commissioning schedule,” it was mentioned in the annual report.
The expansion of crude steel capacity at Dolvi Works from 5 to 10 million tonnes, along with the captive power plant and coke oven plant is therefore likely to get delayed into the second half of FY21.
ICRA Senior Vice-president Jayanta Roy said JSW Steel, which was poised to become the largest steel player in India at this time in terms of installed capacity is currently the third-largest, if one considers Tata Steel’s total steel capacity including those of its domestic subsidiaries.
“JSW ’s large expansion project at Dolvi suffered twice — first because of floods in FY20 and now because of Covid-19, delaying project implementation,” he added.
Before the auction of steel assets under the Insolvency and Bankruptcy Code (IBC), Tata Steel was in the third position. However, with the acquisition of the 5.6-million tonne Bhushan Steel, it moved up in the pecking order.
In terms of production, Tata Steel is the largest steel company in India, pointed out company sources. In FY20, Tata Steel’s production was at 18.2 million tonnes, SAIL was at 16.15 million tonnes and JSW at 16.06 million tonnes.
However, the scenario could change once JSW’S growth plans take off. Also, within the next decade, the company has a plan of taking its capacity to 45 million tonnes.