JSW Steel earmarks `20K cr capex in FY'23, hopes headwinds to end soon

Kolkata: JSW Steel has earmarked Rs 20,000 crore capital expenditure in the current fiscal and hoped that headwinds such as export duty on steel and high coking coal prices are likely to be short-lived, a top company official said.

The leading steelmaker in the country does not expect any "substantial easing" of price of the metal in the domestic market from the current levels, unless the prices of coking coal, a key raw material for the steel manufacturing, moderate in the international market, he said.

The major headwinds are volatile coke price and export duty on steel. However, we expect these to be short-lived. There will be some moderation in exports but value-added steel exports will have less impact. Till now, we remain optimistic and the capex plan of Rs 20,000 crore in the current fiscal remains intact, JSW Steel Joint Managing Director and Group CFO Seshagiri Rao said.

The company had earmarked Rs 15,000 crore capital expenditure for 2021-22 as part of its plan to ramp up capacity. Last year, it had also paid over Rs 19,000 crore to conclude the takeover of Bhushan Power and Steel.

Amid high capex plans, the company's debt level will not increase significantly from the current outstanding of Rs 56,700 crore due to "repayments from internal accruals", the official said.

The government has recently waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry, a move which is expected to lower the cost for the domestic industry and reduce the prices.

Also, to increase domestic availability, the duty on exports of iron ore has been hiked up to 50 per cent, and a few steel intermediaries to 15 per cent.

If such orders continue for long, there will be under-utilisation of the 150 million tonne capacity in the industry as it was built not only for domestic demand and import substitution but also for exports,

Rao said.

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