JSW Steel plans to increase capacity of crude steel to 27 million tonnes by FY-2022

Its Dolvi and Salem (Tamil Nadu) plants will have complete raw material security

JSW Steel, Crude steel, Seshagiri Rao, Bhushan Power and Steel, Monnet Ispat, Covid-19, Dolvi plant, Maharashta, Galvanised steel, Colour coated steel, Tin plates, Odisha, Vijayanagar, Karnataka, Salem, Tamil Nadu, Ohio, Aferpi, Acero, Italy, Railway mills, Two-wheelers, Consumer durables, Refrigerators

JSW Steel plans to expand capacity to produce around 27 million tonnes (mt) of crude steel by financial year 2022 from about 18 mt in fiscal year 2020, joint managing director Seshagiri Rao said.

“We will have 23 mt of production from increased capacities over and above the 3.5 mt from completing the acquisition of Bhushan Power & Steel and 1 mt from the Monnet Ispat acquisition,” he added.

JSW Steel will focus on normalising operations and reducing costs this year so that its earnings before interest, tax, depreciation and amortisation (Ebitda) will improve.

The Covid-19 pandemic has resulted in a shortage of labour. The workforce number came down from 15,000 to 3,000 at its unit in Dolvi (Maharashtra) between March and April. However, it has since gone up to 4,900.

Workers want to come back. In the next two quarters, it will focus on completing pending projects and pending acquisitions.

JSW Steel will invest Rs 4,000 crore in nearly doubling its downstream capacities, like tin plates, galvanised steel and the colour-coated segment, to 9 mt from 5 mt currently.

It has operationalised four mines in Odisha, six in Karnataka and is working on operationalising three more mines in Karnataka, with a total capex of around Rs 1,250 crore.

Its Dolvi and Salem (Tamil Nadu) plants will have complete raw material security, while one-third of its requirements at Vijayanagar (Karnataka) will be met from operational mines.

The company’s overseas businesses also reported losses in the first quarter.
Acero, in Ohio (US) posted an Ebitda loss of $12.54 million, while the Italy business, Aferpi, posted an Ebitda loss of 7 million euros.

The company is also planning to shut down its wire rod and bar mill at the Italian unit and focus on positive Ebitda-generating segments like railway mills, he added.

In 2018, JSW Steel said it would invest $1 billion in its Ohio steel mills, after acquiring the unit for an enterprise value of about $182 million, including around $102 million of debt.

Last week, it reported consolidated net loss of Rs 582 crore, its first quarterly loss in six years, indicating the impact of the virus outbreak and the lockdown.

The company's net debt increased by 14% to Rs 54,527 crore quarter on quarter, driven by Rs 1,290 crore of upfront payment as advances, apart from a Rs 817 crore capex spend during the quarter.
In the first quarter, retail sales inched up as smaller construction and real estate projects in tier I and tier II cities, where labour requirement is minimal, picked up faster. The company is also seeing positive traction from the two-wheelers and tractors segment, packaging and solar, along with consumer durables like refrigerators, dishwashers and ACs.

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