JSW Ispat has decided to stop pursuing some of the ambitious projects it had planned earlier in view of uncertainties in raw material supply, financial constraints etc.
JSW Ispat has decided to stop pursuing some of the ambitious projects it had planned earlier in view of uncertainties in raw material supply, financial constraints and a need to realise synergies with its new promoters.
Among these are a 1,200 mw power plant and coal and limestone mining projects for which JSW Ispat, in its earlier avatar as Ispat Industries, had entered into pacts with various state governments. The company, acquired by JSW exactly a year ago, had signed an agreement with Chhattisgarh State Electricity Board in 2008 for the thermal power plant and another with Gujarat Mineral Development Corp (GMDC) in 2010 for coal mining. It had also secured a lease from the Madhya Pradesh government in 2008 for mining limestone.
“We are in the process of transferring a memorandum of understanding signed by the company with different government agencies to different special purpose vehicles being formed,” said a JSW official, seeking anonymity.
A permit issued by Madhya Pradesh government for carrying out reconnaissance for precious minerals is also being transferred to an SPV.
Lack of visible synergies and project delays are among the reasons cited by JSW for abandoning the projects.
The fate of these SPVs — whether they would be pursued by parent JSW or in joint venture with others, or be shelved altogether — is yet to be decided, the official said.
Among the projects, the company had made some progress on the coal block application in Gujarat, according to Gujarat Mineral Development Corp.
Ispat, which was among 11 companies selected last year by it to approach the union government for mine allocation, however, hasn’t abandoned another coal mining project in Madhya Pradesh where it has been allocated the Behrabandh coking coal block on a sharing basis with Essar, Mukund Steel and Ind Synergy.
It will continue to pursue other projects, the official said.
The biggest of its planned investments is setting up a 0.8 million tonne cold rolling facility at Dolvi at a cost of around Rs300 crore, which is likely to be commissioned in the next 18 months.
The other projects include a 55 mw waste gas-based power plant at an investment of Rs155 crore for which advanced negotiation with technology and equipment suppliers is on; a 600 tonne per day lime calcining plant at Dolvi at an investment of Rs75 crore; a railway siding at a cost of Rs90 crore to save costs in carrying raw materials as well as finished products; and a second colour coating line at its Kalmeshwar complex at a cost of Rs40 crore.
The company’s lime production capacity is half of its present requirement of over 1,200 tonne per day JSW Ispat had earlier talked of setting up a 1 million tonne per annum coke oven plant and a 4 million tonne per annum pellet plant which are also being implemented.
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