Jai Balaji Industries Executes Remarkable Comeback, Unveils Ambitious ₹1,000 Crore Capital Expenditure Strategy

In a striking reversal of fortune, Jai Balaji Industries, once listed among the infamous defaulters by the Reserve Bank of India in 2017-18, is now scripting a success story with plans for a ₹1,000 crore capital expenditure. The steel industry rarity has navigated a challenging journey from the apex court's abrupt coal block deallocation and a bold 5 million tonne per annum greenfield expansion.

The company faced a formidable hurdle in 2011-12 when it defaulted on a substantial ₹3,400 crore loan from a consortium of 22 banks due to the Supreme Court's coal block decision. Despite being dragged into the Insolvency and Bankruptcy Code (IBC), Jai Balaji Industries successfully negotiated an out-of-court settlement with its lenders. Some banks assigned the loans to asset reconstruction companies, including Edelweiss and Omkara, while others resolved dues directly with the company.

Undeterred by the financial crisis, the company focused on enhancing efficiency, slashing costs, and elevating product quality. Specializing in manufacturing ductile iron (DI) pipes for water supply, specialty ferroalloys, and TMT bars, the turning point for Jai Balaji Industries materialized in 2020.

The company's net profit for the first half of the fiscal year soared to ₹372 crore, a significant increase from the ₹43 crore reported during the same period the previous year, driven by improved margins. Total income witnessed a 7% rise, reaching ₹3,065 crore compared to ₹2,876 crore.

Aditya Jajodia, Chairman and Managing Director of Jai Balaji Industries, attributed the company's turnaround to the unwavering support of financial lenders, shareholders, and employees who demonstrated steadfast faith in the management's capabilities. To bolster net worth and instill confidence among lenders, the promoter's family injected ₹250 crore into the company this year. Additionally, the company recently secured ₹559 crore from Tata Capital to retire outstanding debt and allocated ₹40 crore for working capital.

Jai Balaji Industries has outlined a comprehensive capex plan of ₹1,000 crore, primarily directed at augmenting the capacity of DI pipes and special-grade ferroalloys at its Durgapur plant in West Bengal. Simultaneously, the company is in the early stages of developing a 50-70 MW solar power plant through a separate capex initiative.

Anticipating completion within 18 months, the capacity expansion project aims to position the company as net debt-free by repaying the existing debt of ₹560 crore. The strategic focus on ductile iron pipes aligns with the Central government's Jal Jeevan Mission, supporting water supply projects nationwide. The sector is poised for robust growth, with an expected Compound Annual Growth Rate (CAGR) of 13-15% in the near future.

HBL