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With JFE tech, JSW charges up electrical steel plans

Tuesday, 18 December 2012 - 2:32am IST | Place: Mumbai

The company is looking to become the biggest domestic player in electrical steel.

JSW Steel, India’s third biggest maker of the alloy, is sourcing technology for electrical steel from its Japanese partner JFE, harbouring big ambitions in a segment largely untapped by domestic manufacturers.

In a phased manner, the company is looking to become the biggest domestic player in electrical steel, which is a value-added product used in electrical applications such as transformers, electrical motors, etc.

Indian steelmakers have kept away from venturing into the sector due to high level of sophistication involved in making this product and especially a lack of access to technology, resulting in the entire local requirement being met through imports.

With JFE’s technology JSW would be the first player in the country’s organised steel market to make electrical steel.

“The initial annual output is projected to be 200,000 tonne, which will be increased to 0.6 million tonne per year in phases,” said the company in a press statement on Monday.

The facility will come up at its site in Vijayanagar in Karnataka.
While the current tie-up is for cold rolled non-grain oriented, referred to as CRNGO electrical steel, the company said it is in negotiations to get into grain-oriented electrical steel, too.

Both the varieties are categorised on the magnetic field they support when electrically charged and hence have niche applications.

Analysts said JSW is slowly coming back to normalcy after being torn apart by both – the investors and the government authorities – for its alleged involvement in illegal mining, and falling capacity utilisation at its flagship unit in Vijayanagar.
“We see benefits of lower coking coal costs ahead with marginally better product realisations, leading to better operating margins,” said analysts.

However, while the company still maintains its production target for fiscal 2013, analysts Chirag Shah and Faisal Memon from Barclays feel it isn’t possible.
“JSW now has to track a 77% utilisation rate for the remainder of the fiscal to clock its target of 8.5 mt, which appears difficult in the backdrop of the continuing ore shortage,” they said in a report.

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