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| JSW Steel bullish on rural demand |
| BS Reporter / Chennai/ Hyderabad Mar 18, 2009, 00:06 IST |
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JSW Steel, India’s third-biggest steel producer, would set up 600 outlets to supply steel in rural areas, said JSW vice-chairman and managing director Sajjan Jindal.
Speaking to the media here on Monday on the sidelines of a seminar, Jindal said the company would run its mills at full capacity as it was seeing a spurt in the demand for steel in rural areas. “These areas have not been hit by recession and there is surplus cash as agriculture has been growing over 3 per cent over the years.”
He said construction and infrastructure would be the main drivers of the growth. Among others, the company is looking to replace asbestos with steel sheets as cement prices were still intact.
The company typically exports about 40 per cent of its capacity but now it plans to reduce it by about 70 per cent to meet the increasing demand in the country. “The decline in steel prices to $450 a tonne (about Rs 23,000) from the earlier $800 a tonne (Rs 40,000) has revived the purchasing power. The company already has orders till June,” he said. JSW has a capacity of about 7.8 million tonne per annum (mtpa) and is ramping it up to 10 mtpa by 2010.
For JSW the third quarter ending December was tough as its working capital was blocked with inventories piling up. “Normally, the inventory lasts for a week but during the December quarter it touched two months.” It had to shut its plant at Houston, US, as it was operating at less than 20 per cent of the installed capacity due to low demand in the US.
Meanwhile, the company is eyeing iron ore mines in Australia to ramp up capacities. “Funds would not be a constraint for the new acquisitions, for which targets are yet to be identified,” he said.
JSW has obtained various clearances from the government for bauxite mining in Andhra Pradesh and would sign purchase agreements shortly.
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