JSW Steel to invest Rs 17,718 cr, plans secondary listing

NEW DELHI: Steel maker JSW will invest more than Rs 17,000 crore to increase production capacity to 10 million tons by 2010, amid reports it was considering a secondary listing in overseas bourses.
   
"The firm will invest Rs 17,718 crore (about USD 4.5 billion) to ramp up production capacity to 10 million tons (MT) from current 3.2 MT. Of the total money, we will invest Rs 3,937 crore (about USD 1 billion) this fiscal," JSW Group Director Finance Seshagiri Rao told.

He said of the total money, the company has already raised USD 500 million (about Rs 2,000 crore) till April and the remaining money would be raised through cash accruals.

The company has plans to increase production to 30 MT by 2020, but blueprint for the same was yet to be finalised.
   
Rao said outlook for steel looked bright with the construction sector doing well. Besides sales of other steel products were also picking up.
   
"I have reasons to believe that steel prices would not go down as the sector is doing well," Rao said.

JSW is also considering a secondary listing on an overseas stock exchange either in Singapore, New York or London to fund its expansion plans.

The plan would fit in with efforts to expand outside India through possible acquisitions in Europe for about USD 500 million, JSW Vice-Chairman and Managing Director Sajjan Jindal said.
   
"I would like to see more Indian manufacturers gain listings outside India. This would help improve investors' confidence in companies of this sort as the Indian economy grows stronger," Jindal was quoted by the Financial Times as saying last week.
   
Jindal said while most of the company's production would continue to focus on Indian market, he saw benefits of listing about 10 per cent of the company's shares on an overseas stock exchange "in about two years time".

The proposal to go for a secondary listing was based on the projection that JSW's stock market value would rise during the next two years as it increases output and on the back of boosted profits.

About half the current equity of the company is owned by Jindal and other family members with the balance traded on the Bombay Stock Exchange, the FT reported.
   
"Assuming the plan for a secondary listing proceeds, the Jindal family would keep its stake at about 50 per cent by buying existing shares on Bombay Stock  Exchange before the float and then issuing new shares via the selected foreign exchange," it  said.
   
JSW had EBIDTA of 750 million dollar on sales of 2.7 billion dollar last year and this year it is expected to report EBIDTA of about one billion dollar on sales of about 3.5 billion dollar, the daily said.