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Sajjan Jindal-led JSW Steel today said it has drawn up capital expenditure programme of Rs 26,800 crore for the next three years period to expand capacity.
"We are investing Rs 26,800 crore over the next three years period to expand our steel capacity. We will raise around Rs 15,000 crore through debt and the balance will be through cash accruals," JSW Steel joint managing director Seshagiri Rao told reporters here.
The company is looking at expansion of existing units, alongwith new greenfield steel projects at Odisha and Jharkhand, for which it has already started acquiring lands, Rao said, adding that the company is not looking at any more acquisitions in the country to grow its business.
Welcoming the union cabinet's approval of the National Steel Policy (NSP), 2017 which provides a long term vision to give thrust to the steel sector, Rao said the board of the company has approved the key new investment projects to expand overall steelmaking capacity, lower operating costs and enrich product mix.
It is augmenting crude steel capacity at Dolvi to 10 MT from the present 5 MT. The estimated project cost is Rs 15,000 crore and the project is expected to be completed by March 2020.
The company has taken up revamp and capacity upgradation of BF-3 at Vijayanagar works from 3.0 MT to 4.5 MT. The estimated project cost is Rs 1,000 crore and the project expected to be commissioned in a period of 20 months.
Commenting on the outlook, Rao said, the overall consumer discretionary spending, public capex on 'Rurban' infrastructure development and foreign direct investment in the domestic market have continued to improve, supporting a gradual growth recovery.
"Steel demand is expected to benefit from rising infrastructure spend and improving consumer demand in FY2018. The allocation for infrastructure development at Rs 4 trillion in the Union Budget with thrust on affordable housing, water and gas pipelines, renewable energy and road sector, and expected recovery in rural demand on the back of normal monsoon expectations augurs well for steel consumption growth in the country. We expect Indian steel demand to grow by four million tonnes which is around 5 per cent in FY2018," he said.
Rao said steel prices are expected to remain range bound. In the absence of further supply-demand disruption, raw material prices are easing off and volatility is receding. However, coking coal contract prices for 2QFY2017 is expected to settle at a price higher than the current spot and this is expected to keep steel prices range-bound.
Meanwhile, the company reported a three-fold increase in consolidated profit at Rs 1,008.5 crore for the fourth quarter ended March 31, 2017 due to higher export sales, firm steel prices, along with, lower cost of production.
The consolidated total income increased to Rs 17,973.06 crore, over Rs 11,815.21 crore in the corresponding quarter of FY16.
"Despite weak steel demand of 2.6 per cent in the domestic market and poor liquidity post de-monetisation as well as a surge in raw material prices, we have enhanced exports sales to offset domestic slowdown, with continued focus on enriching the product mix," Rao said.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)