Mumbai: Mumbai-based steel major JSW Group plans to diversify from its metals business into manufacture and marketing of cement.
This marks the second recent diversification for the Jindal group, which recently announced plans to build a 1,000MW lignite-based power plant with an investment of Rs5,000 crore in Rajasthan.
The mines-to-metals group is examining the feasibility of setting up a cement plant—at a cost of Rs130 crore—at its Toranagallu steel facility in the Bellary district of Karnataka. The plant will manufacture 0.6 million tonnes (mt) of cement.
JSW Steel’s director (finance) Seshagiri Rao M.V.S. says, “Our group company JSW Cement is working on a project report and financing options for the cement foray.”
The move to diversify into cement in addition to mining and metals, ports and industrial gases is an attempt by the Jindals to capitalize on the growth of the core and manufacturing sectors in an economy growing at more than 9% per annum.
The cement foray will also allow the group to utilize a by-product of steel making—slag, which comprises impurities that are removed while converting ore to steel in furnaces.
With the proposed expansion of its steel plant from 3.8mt per annum to 6.8mtpa, by March 2009, the Rs6,018 crore company will be producing more slag. This waste product is currently sold at Rs250 per tonne to other cement makers in the area.
“With more slag available in the future, the company wants to use it to manufacture a higher value-added product to boost its margins and revenues,” said a senior JSW Group official.
JSW Steel, the flagship itself, has been in a massive expansion phase having outlined plans to invest Rs6,200 crore over the next couple of years for a variety of projects.
JSW Energy, which recently laid the foundation stone in Barmer, Rajasthan, for its power foray, is also planning to bid for ultra mega power projects and is talking to prospective foreign partners.
JSW Steel shares closed at Rs452.75, down 3.06% on Wednesday. The benchmark Bombay Stock Exchange Sensex fell 3.49%.