JSW Steel Ltd, on Monday, said that the sector was witnessing a decline in FII (foreign institutional investors) investments over the past couple of months due to their concerns about developments in the domestic steel sector. MVS Seshagiri Rao, director, finance, JSW Steel Ltd, “We have received a letter from one of our FIIs who posted a query on steel being listed under the Essential Commodities Act.”
According to analysts, government intervention and a drastic fall in the market in the past 3-4 months has forced FIIs to sell Indian equities. However, a similar trend of decline has been reported across other sectors of the Indian economy. Going forward, raising funds for JSW’s capex plans are also likely to be affected if the current sentiment of uncertainty in the market and increased government intervention continued.
“We have completed the financial closure to fund our expansion in the first phase (up to 2010) that includes expansion of capacities in steel, cement and power. We are watching the market carefully to begin the next phase of expansion (from 2011 to 2015) and then we will decide on raising funds,” said Rao.
JSW Group companies that were supposed to be raising funds via the capital market have deferred their listings and are waiting for market conditions to improve. JSW Energy Ltd, which has filed its draft red herring plan with Sebi, is waiting for the market to correct before it comes out with an initian public offer. “If we get an approval from Sebi, we will take a decision based on market conditions,” said NK Jain, vice-chairman, JSW Energy Ltd.
Similarly, JSW Steel has deferred listing its Dutch mining unit on the London Stock Exchange due to uncertainties in the global economy. JSW Bengal Steel Ltd, with plans to raise Rs 3,800 crore via an initial public offer to part-finance its Rs 15,000- crore 6 mtpa steel plant in West Bengal is also waiting for the markets to look up. The company expressed concerns over rising raw material costs across the globe being responsible for the spiralling steel prices. JSW, imposed a surcharge of Rs 5,000 per mt to cover rising raw material costs to counter the push to cool inflation.
