The investment will purchase Jindal Stainless the first right of choice for the nickel pig iron smelted at the planned factory, but no concessionary prices.
The business added that the fiscal advantages of the investment would reflect on its consolidated balance sheet once the factory becomes operational.
Shares of multi-bagger Jindal Stainless surged over 4% to Rs 290.2 in Wednesday’s session on BSE after the business revealed it had bought a 49% share in Indonesia-based Nickel Pig Iron Company.
Jindal Stainless announced a joint venture agreement with an Eternal Tsingshan company to establish a greenfield 200,000 metric tonne nickel pig iron production in Indonesia.
The corporation would be spending $157 million (Rs 1,290 crore) on the project over the following two years for a 49% ownership interest. The remaining share will be with New Yaking Pte, a subsidiary of Eternal Tsingshan.
At 10.23 am, the stock was trading 2.2% higher at Rs 286 on BSE. The stock has offered a multi-bagger return to investors as it has increased by 1067% in the previous three years.
Jindal Stainless will be investing in internal accruals, according to Abhyuday Jindal, the company’s managing director. The investment would assist India’s biggest stainless steel factory to secure a supply of nickel, a critical component for creating the lustrous alloy, he added.
“Now that we are a 3 million tonne capacity business, not having backward integration for nickel was a significant risk for the country,” Jindal told ET.
The investment will purchase Jindal Stainless the first right of choice for the nickel pig iron smelted at the planned factory, but no concessionary prices. The business added that the fiscal advantages of the investment would reflect on its consolidated balance sheet once the factory becomes operational.
Nickel pig iron is a cheaper alternative to pure nickel for manufacturing stainless steel popularised by the Chinese. That accounts for 16% of the entire nickel demand of Jindal Stainless, the firm stated. The balance of the nickel need is satisfied via scrap and to a lesser degree through pure nickel.
New Yaking, which would be the largest investor in the planned factory, will be looking after the operations of the smelter, Jindal stated. The Indonesian company’s capital investment in the project will be considerably lesser.
“We choose to preserve this much (49%) ownership because we do not want to get into the operational part,” he told ET. New Yaking already runs numerous similar factories in Indonesia with funding from other outside firms, he noted.
The facility is designed to feature two rotary kiln electric furnaces (RKEF) and is projected to be operational by the end of FY25. Jindal Stainless aims to achieve a 25% internal rate of return on its investment.
