More than growth, I see these as attempts to diversify business profile from ‘iron dependent’. Management has alluded to Steel as hedge to iron ore bet as well, when inquired about steel investment being RoCE dilutive in nature. Though at very good RoCEs.
Large capex is being done across the industry to increase Iron Ore mining. Lloyds, NMDC and Captive iron ore mines from large steel players. And it is (and likely to remain) a commodity.
Investment in these 2 business line is not substantial. Approximately cashflow generation from 1 quarter.
Option value can be provided. If management sees opportunity to scale and generate value, they will do it. And, they are likely to have cash generation for that.
Disclosure: Invested.
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