JSW Steel plans Rs 20,000 crore capex for FY25, says CEO – EQ
In Short : JSW Steel plans to allocate Rs 20,000 crore for capital expenditure in FY25, according to the CEO. This substantial investment underscores the company’s commitment to expanding its production capabilities, enhancing operational efficiency, and driving growth in the steel sector.
In Detail : The company had a capex spend of Rs 17,000 crore last year.
JSW Steel has earmarked Rs 20,000 crore for its capital expenditure (capex) plans for FY25, as it expects the fiscal to be good with economic momentum and steel demand continuing to be strong.
The steel manufacturer, led by industrialist Sajjan Jindal, also intends to reduce use of thermal coal to a bare minimum and later phase it out, joint MD & CEO Jayant Acharya said.
“Our plan is to spend Rs 20,000 crore capex in FY25, which includes expenses earmarked for Dolvi phase-III expansion and phase-II of Bhushan Power & Steel (BPSL). We have strong cash in our books of Rs 10,500 crore,” Acharya told FE in an interview.
“The capex would also be used for completion of JSW Vijayanagar Metallics (JVML), slurry pipelines in Odisha for which 22 km has been already laid and the pellet plant in Odisha, for which we have got approvals,” he said.
The company had a capex spend of Rs 17,000 crore last year.
To reduce thermal coal to a bare minimum and later phase it out, JSW Steel is also betting big on renewable power. Group firm JSW Energy will be setting up a total of 1,600 MW of renewable energy capacity in the next couple of years. About 400 MW of wind and 200 MW solar capacity would be commissioned at Vijayanagar, in addition to the existing 225 MW already in operation, while 600 MW of wind capacity is expected to start operations in phases.
Another 130 MW of renewable energy capacity will come on stream in Dolvi and Salem this year, he added.
JSW Steel expects to complete the acquisition of Mozambique-based Minas de Revuboe Limitada (MDR) for $73.75 million this year. On Friday, the company’s board approved the acquisition of MDR, which owns a coking coal mine in the Moatize Basin of Tete Province in Mozambique. “We see a good opportunity to develop this mine for India operations as it is logistically closer to India than other mines,” Acharya said.
Aided by volumes from JVML and BPSL phase-II expansions, which will partly come in this year with the full impact expected in FY26, JSW Steel’s outlook for FY25 looks good.
“We expect Ebitda per tonne improvement driven by lower raw material costs as coking coal prices are expected to go down by $20-$27 per tonne. It would further benefit if the prices are maintained in Q2.
Better operating efficiencies and rising steel prices across the globe, which bottomed out in Q4, would also come in aid.”
“We see a stable pricing environment and lower cost to improve Ebitda margin. India is a good growth story as the economic momentum and steel demand in the country continues to be strong. The 9% growth in Q4 was the lowest in two years but this itself will translate to 12 million tonnes of incremental demand,” he said, adding the supply demand is also quite balanced.
The margins, which was impacted in Q4 due to higher coking coal prices, will also recover in the subsequent quarters. However, there are economical and geopolitical challenges globally and India should be also concerned of continuing imports from China, Acharya added.
