JSW Steel, the flagship company of the diversified JSW Group, is on track to expand capacity to 37 million tonne per annum (MTPA) and further to 50 MTPA by the end of this decade.
On the renewable front, the company has already commissioned 225 MW of solar, and the company is expecting to start 1,000 MW of capacity – including solar and wind – soon.
“Our capacity expansion to 37 MTPA is on track, which would be completed by FY25, and then to 50 MTPA by the end of the decade, while remaining focused on the Indian market. These would be done through brownfield expansions at our current sites. This will make JSW Steel one of the largest steel producers globally, and our product basket capacity growth will be aligned more to value added products, with focus on products for retail markets,” JSW Steel Joint MD & CEO Jayant Acharya told FE in an interview.
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Currently, JSW Steel has a crude steel production capacity of 27 MTPA. The company is also focusing on downstream capacities such packaging and tin plates, he added.
Despite the capacity addition, the company will not be adding much debt this year. The company, which reduced debt by ₹10,153 crore and built a cash balance of more than ₹20,000 crore in FY23, had a net debt of ₹59,345 crore as of March 31, 2023.
However, the merger of its subsidiary JSW Ispat Special Products (formerly Monnet Ispat & Energy) would add another ₹3,000 crore of debt “as and when it happens”. JSW Steel, along with AION Investments Private-II through CSSL, acquired JISPL for ₹2,457 crore in 2018.
JSW Steel had posted a “good” fourth quarter, riding on volume growth in both Indian and overseas subsidiaries, while the last nine months prior to that were tough. “The first six months of the year was a volatile period, with energy costs – coking coal, coal and gas – going through the roof. Steel prices fell and raw material prices followed with a lag.”
JSW Steel has earmarked Rs 18,800 crore as capex for FY24, primarily for completing its 5 MTPA brownfield expansion at Vijayanagar and phase-II ramp-up of capacity at Bhushan Power & Steel (BPSL) to 5 MTPA from 3.5 MTPA. Further, the company would use a part of the capex to add downstream capacities at Rajpura and Jammu & Kashmir, and would earmark a portion for backward integration of its mining facilities.
The capex would be funded from internal accruals, Acharya said. The company had spent a total of ₹14,214 crore as capex for FY23. The firm has also is seeking shareholder approvals to raise upto Rs 18,000 crore through various modes, a part of which could be used to refinance some amount of debt.
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The steel demand in India grew 13.3% on a year-on-year basis to 119.86 million tonne in FY23, and going forward is expected to grow by about 7-8%.
“Going forward, FY24 would be much better as the India story in terms of demand is good, rise in government capex, pickup in manufacturing and energy transition among others. I don’t see any slowdown of demand in India, and lower energy prices will aid manufacturing in India, even the external demand may remain uncertain,” Acharya added.