Jindal buys Indonesian plant in $32 million deal

Wednesday, 21 July 2004, 07:00 Hrs
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NEW DELHI: Jindal Stainless Ltd., the flagship company of the private sector diversified Jindal Group, has acquired a steel plant in Indonesia in an estimated $32 million deal.

"We have signed a sale purchase agreement to acquire a running 50,000 tonnes per annum capacity steel plan in Indonesia from Maspion Stainless Steel Indonesia," said Ratan Jindal, managing director and vice chairman of Jindal Stainless.

Of the $32 million, the company is planning to raise $8-12 million through internal resources and for the remaining it has got firm commitments from leading banks, Jindal told a press conference here.

On the advantages of the deal, Jindal said as against the average demand growth of three to five percent for stainless steel globally, in south Asia the growth is over 10 percent.

More importantly, Indonesia offers the advantage of approaching attractive markets in Myanmar, Vietnam, the Philippines, Thailand and Malaysia under the ASEAN free trade agreement, he added.

Australia and New Zealand are other markets where the stainless steel to be produced at the plant will find ready outlets.

"The Indonesia plant will provide forward expansion for our operations here as all the raw material, hot rolled steel coil, for the plant will be exported from our Hisar plant (in Haryana)," said Jindal.

The company, which already has a presence in China and Vietnam, is planning to double the production capacity in Indonesia within this fiscal year and also raise the labour force from 150 to 250 to run three shift operations.

The Indonesia plant will allow Jindal Stainless to push ahead with its expansion plans within the country, the company officials said.

"We see turnaround in the Indonesian plant in the first year itself as the staff is well trained by Sumitommo Metals Industries under their technical and financial collaboration.

"The main reason why the plant was sold was the problem of raw material, which they were sourcing from Japan and South Africa," said Jindal.

Catering to over 40 percent of the stainless steel demand in the country, the company currently exports around 210,000 tonnes of stainless steel worth $275 million annually and hopes to raise it to 250,000 tonnes this year.

To meet this target the plant capacity at Hisar is being raised from 40,000 tonnes to 190,000 tonnes and a new 1.6 million tonne integrated stainless steel plant is being set up at Duburi in Orissa.

Of the estimated 9 billion investments planned this year, the Orissa plant is expected to see an investment of 6.5 billion.

Another 1 billion is being invested in the Hisar plant as part of the ongoing expansion and modernisation programmes.

The company is planning a captive power plant at Orissa with an investment of 6-7 billion to set up generating capacity of 130-160 MW, Jindal said.

"We plan to look at substitution for various products whether in railways or gas cylinders in good quality stainless steel that will make for better look and lighter weight," said N. C. Mathur, director (corporate) of Jindal Stainless.

Source: IANS
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