JSW Steel to invest Rs 15,000 crore in Karnataka

Sajjan Jindal-led JSW Steel said it would be investing Rs 15,000 crore to expand capacity at its integrated plant in Vijayanagar, Karnataka, for commissioning in 2023-24 (FY24). Of the 6-million tonne expansion planned, the new part of the project comprises 5 million tonnes, while the rest 1 million tonne will be through optimisation at the existing facility.

After the completion of the project, the company’s total installed capacity in Vijaynagar will reach 18 million tonnes per annum (mtpa).

The project has received environmental clearance from the Ministry of Environment, Forests & Climate Change, and preliminary clearance from the state government’s single window high-level clearance committee, the company said in a press release.

In September 2021, JSW Steel had raised $1 billion (Rs 7,300 crore) through the issuance of sustainability linked bonds (SLBs) in the overseas market. “The proceeds of the issue will be used by the company to fund capex plans as well as for refinancing debt,” it had said.

Apart from this, the integrated steel producer in its Q4FY21 results had indicated an unspent capex of Rs 21,162 crore. Analysts are of the view that the company has enough liquidity to carry out this planned expansion. The completion of the new project will form part of JSW Steel’s next phase of growth, targeting an overall capacity of 37.5 mtpa in India and the US by FY25. “We are expecting India’s steel consumption to grow 7- 7.5 per cent per annum over the next five years. So, JSW Steel’s capex is in line with the country’s requirement and should get absorbed by the market,” said Hitesh Avchat, associate director at Care Ratings. According to brokerages, the new project is value accretive since it would involve a capex of around Rs 3,000 crore per million tonne, as against the usual project cost of about Rs 5,000 crore for a million tonne. 

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