JSW Steel to up Dolvi plant capacity to 15 mt.

After the turnaround of the Dolvi plant, JSW Steel plans to focus on expansion of the unit. With an opportunity to expand capacity up to 15 million tonnes a year at a much lower cost, the company has decided to enhance capacity initially to 5 million tonnes from the current 3.3 million tones, for a Rs. 3,300-crore investment.

Having acquired the Dolvi unit in Maharashtra from debt-laden Ispat Steel for Rs. 2,157 crore in 2010, JSW inherited a total liability of Rs. 9,500 crore, the annual interest of which was Rs. 1,200 crore.

Within a year of acquisition, JSW refinanced the entire debt to reduce borrowing cost by 2-3 per cent. Besides, it invested Rs. 2,140 crore to install a coke oven and pellet plants, and also a cold rolling mill to secure backward integration and reduce production cost. It commissioned a 55-MW plant, which would use waste gas generated by the blast furnace.

Seshagiri Rao, Joint Managing Director, JSW Steel, told Business Line, 'Having completed what we had envisaged at the time of the acquisition, the unit has turned profitable independently. Much of the company's future investment would happen at Dolvi.'

Citing that plants with capacity of 15 million tonnes at a single location existed globally, Rao said a similar expansion could be undertaken at Dolvi. 'The realisation is also higher in the market where the Dolvi plant sells, as compared to the Vijayanagar plant in Karnataka,' he said, adding that JSW could source raw material for the Dolvi unit from across the world, as it was a port-based plant.

Rao said the cost of expansion at Dolvi would be much lower, for instance, a greenfield steel plant would need an investment of about Rs. 70,000 a tonne, while at Dolvi it is being done at Rs. 20,000 a tonne.

JSW Steel expects the contribution of value added products to the total sales to increase from nine per cent to 33 per cent this fiscal.

The company has commissioned a new cold rolling mill at Vijayanagar in Karnataka, expanded coated product capacity in all three Maharashtra units, while the Salem unit continues to produce more of alloyed products in the long product segment, added Rao.


HBL