India’s Jindal Steel and Power Limited (JSPL) is likely to participate in the privatization of the government-run steel producer Rashtriya Ispat Nigam Limited (RINL) when invitations for bids start at the end of January, company sources said on Friday, December 30.
The sources said that, since JSPL is predominantly a long product producer, and RINL’s 7.3 million mt is also exclusively long product capacity, successful acquisition of the latter will achieve higher economies of scale for the product category.
Also, the RINL mill being port-based at Vishakhapatnam in the south, it will bring a competitive advantage in terms of importing coking coal and exports of finished steel, the sources said.
They said that “at the right price” mergers and acquisitions are a faster route compared to construction of greenfield projects and RINL could play and important role in JSPL, a group achieving a cost-effective growth target of 30 million mt per year.
On completion of brownfield expansion projects by the end of the fiscal year 2023-24, JSPL’s Angul mill will have a capacity of 12 million mt and its Raigarh mill will have a capacity of 3.6 million mt, aggregating to 15.6 million mt per year.
Not only are RINL’s products complementary to JSPL’s product portfolio, but the former has large tracts of land available for expansion and hence, if successful, after the acquisition RINL will be expanded and will not remain an exclusive long products producer, the sources said.
