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Steel and cement companies find themselves at the cusp of a much-awaited CAPEX cycle that usually lasts between six and eight years, with the government focusing on infrastructure spending, including investment in roads, railways, ports, and low-cost housing. “When there is a downturn, we start investing. That is why our capacity expansion at Dolvi is coming at the right time when markets are looking up. Similarly, if you look at the next three-four years, we expect that there will be a mismatch in demand growth versus supply. It is, therefore, the right time to commit further investment, particularly brownfield expansion,” said Seshagiri Rao, joint managing director and group chief financial officer (CFO), JSW Steel Ltd.
The company has laid out a CAPEX of Rs 25,000 crore, of which Rs 15,000 crore will be spent to expand capacity by 5 million tonnes per annum (MTPA) at its Vijayanagar plant, enhancing mining capabilities and efficiencies at a CAPEX of Rs 3,450 crore, and setting up 0.12 MTPA color-coated downstream facility in Jammu and Kashmir for Rs 100 crore. In this fiscal, it will spend Rs 6,385 crore. Of this, Rs 1,700 crore will be spent on the maintenance of plants, with the rest being invested in other projects in the plant.
Of the Rs 25,000 crore, JSW Steel will spend Rs 18,540 crore which will be financed through internal accruals of Rs 10,500 crore and Rs 7,800 crore through debt.
Tata Steel will spend around Rs 11,000 crore this fiscal, including Rs 7,500 crore in India. “With the return of economic activity, the overall steel demand has been recovering gradually. We ramped up steel production with better market conditions and our steel sales volume increased by 17 per cent quarter-on-quarter to 2.47 million tonnes in the March quarter. The spot hot-rolled coil gross spread improved during the quarter with higher steel prices, translating into the profitability of our steel mills,” said Koushik Chatterjee, executive director and CFO, Tata Steel Ltd.
“The company has restarted work on the pellet plant and the cold rolling mill complex at Kalinganagar. We are also restarting the other part of the Kalinganagar project, which is the remaining part of the 5-million-ton expansion and we expect it to be commissioned in FY’24,” Chatterjee added.
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