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JSW Steel: A brief overview… - Views on News from Equitymaster
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JSW Steel: A brief overview…
Jan 8, 2007

JSW Steel: JSW Steel is a large sized integrated flat steel producer in India and the only producer of flat steel in South India. The Company's principal activity is to manufacture hot rolled steel coils in India using the revolutionary Corex technology. In addition, the Company also manufactures steel plates and sheets. It manufactures steel using oxygen-based iron and steel through continuous casting and hot rolling. The company’s production facilities are close to the mineral resources as well as to the market for its products. With a 2.5 MTPA capacity, it is amongst the largest manufacturer of flat products in the country. It has a strong presence in the value-added downstream product segments as well. The company’s products primarily cater to the automobile sector, appliances, storage tanks, pipes, general engineering, etc. Features:

  • The largest integrated flat steel producer in India with operations spanning across iron ore mining to production of value added products. The company is strategically located as its facilities are close to both key raw material sources as well as markets for its end products.

  • The company has got strong presence in value added products, the demand for which is growing and expected to increase in coming years on account of buoyant automobile industry.

  • The company is exposed to the risk of rising input costs. The company sources about 75% of its iron ore requirement and 100% of coking coal requirement externally. Irregular and insufficient supply of raw materials will affect company’s operations. The rising raw material pries are putting downward pressure on operating margins. Margins may contract further if the on account of spiraling input cost.

  • The company has outlined expansion plans to increase its market share and achieve economies of scale. It plans to increase its total capacity from current 2.5 MTPA to 6.8 MTPA in next 3 years. With this, its value added products capacity will go up to 1.8 MTPA from the current level of1 MTPA.

  • To reduce its costs and to support its huge expansion plans, the company has taken strategic initiatives of forming subsidiaries to acquire coal assets overseas.

  • The company’s investment outlay will be a mix of debt and internal accruals.

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