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Jai Balaji to invest Rs 1,000 crore to boost Durgapur plant capacity

The company, which was once financially stressed, is looking to fund the expansion through internal accruals

steel company, steel firms, ArcelorMittal, JSW Steel

Ishita Ayan Dutt Kolkata

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Steelmaker Jai Balaji Industries is investing Rs 1,000 crore over the next 15 to 18 months, charting a new phase in its growth journey.

The company, which was once financially stressed, is looking to fund the expansion through internal accruals. Aditya Jajodia, chairman and managing director of Jai Balaji Industries, said that the company faced tough challenges in the last few years which have now been resolved.

“Jai Balaji 2.0 aims for a transition into a high-margin business, and we plan to achieve this by the lowest-cost capital expenditure for capacity enhancement, economies of scale, operational efficiencies, and becoming net debt-free in the next 18 months while focusing on specialised products like DI (ductile iron) pipes and special ferro alloys,” he said.

The brownfield expansion of manufacturing capacity will be at its Durgapur plant in West Bengal. Of the Rs 1,000 crore, Rs 350-400 crore has already been invested. Jai Balaji has four integrated steel manufacturing units across West Bengal and Chhattisgarh.

At present, the share of value-added products is at 55 per cent, which is expected to increase to 80 per cent in the next 18 months. This is anticipated to reflect in the top line of the company, as the revenue is expected to increase to Rs 9,500-10,000 crore in FY26. In FY23, revenue had stood at Rs 6,125.08 crore.

The focus on value-added products is already evident in the company’s performance. Jai Balaji reported its highest-ever quarterly profit after tax (PAT) of Rs 234.60 crore in Q3FY24 on Monday. In Q3FY23, it had stood at Rs 27.91 crore. Revenues from operations stood at Rs 1,538.99 crore in Q3FY24, compared to Rs 1,536.99 crore in Q3FY23.

Jajodia said that the company would chase the bottom line and not the top line. “The growth may be slower, but it will be on a strong foundation.”

For Jai Balaji, the turnaround is like a second coming. Jajodia said that the turnaround of the company was a story of resilience and strategic transformation, turning setbacks into opportunities and reshaping its trajectory for sustained success.

The last 10-11 years have been challenging for Jai Balaji. The company was on the Reserve Bank of India’s (RBI's) second list of non-performing assets (NPAs) in 2017-18, mandated for resolution under the Insolvency and Bankruptcy Code (IBC). However, there was a settlement with some banks; a few banks had sold the loans to Asset Reconstruction Companies (ARCs) – Edelweiss and Omkara – which helped save the company from IBC.

Then, last month, it executed a debt agreement for Rs 559 crore with the non-banking financial company (NBFC) Tata Capital Financial Services, to retire the existing debt held with the ARCs. And now, it aims to be net debt-free in 18 months.

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First Published: Jan 15 2024 | 7:40 PM IST

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