After cutting investment in the first phase of the its ambitious 10-MTPA West Bengal project by almost a third, JSW Steel today said the commencement of construction work at the site of the mega steel plant will now be deferred on account of the current "economic situation".
"There is a slight deferral for some time (on the commencement of construction work) till the economic situation improves," JSW Steel Vice-Chairman and MD Sajjan Jindal told reporters on the sidelines of an Assocham conference here.
Construction work at the site of the steel project in Salboni, West Bengal was scheduled to start in March next year, but is likely to be delayed by 6-8 months.
Faced with a liquidity crunch JSW Steel has earlier this year said that it is cutting its proposed investment by nearly one-third to about Rs 4,000 crore for the first phase of the Rs 35,000-crore mega steel project in West Bengal.
The company has seen demand and prices of products coming down by about 50 per cent from the peak of the 2008, due to the current slump in the markets.
Moreover, Jindal said, its US mills would continue to operate at 20 per cent of the installed capacity of 1.2 million tonnes till the demand for the commodity improves in the country. He further denied reports suggesting shutting down of the mills.
Hit hard by the global economic crisis, JSW Steel has almost halved its workforce to 400-500 employees at its US steel mills to remain competitive in the current scenario.
The mills can produce 1.2 million tonnes of plates and 0.5 million tonnes of pipes. Citing the distressed US economy, the steel major has also deferred its plans to increase its pipe making capacity by 5 lakh tonnes.
In November last year, the company had laid the foundation stone for the project and said the first phase with 3 million tonne capacity would come up at the cost of Rs 10,000-12,000 crore.
When asked if its another 10-MTPA proposed steel project in Jharkhand would also be delayed on account of the current economic environment, Jindal said the firm is working to get all the regulatory approvals, "which is a long process".
