JSW Steel’s debt will remain range-bound in FY24 with the addition of ₹3,000 crore, if the merger of JISPL goes through, said Jayant Acharya, Joint MD. In FY23, the company reduced debt by ₹10,000 crore, and the cash balance remains at ₹20,000-crore plus. In an interview with businessline, Acharya talks about debt-reduction plans, ramping up capacities in downstream, outlook on exports and international operations. Excerpts:
JSW recently got approval to raise funds. Will it be used towards debt repayment?
The additional funding we are raising is to look at some of the repayments that are coming up, and also to fund expansion, which we will take up this fiscal. Some of the fund-raising is also enabling in nature.
Our capex allocation for this year is in the range of ₹18,800 crore, and we expect to fund it primarily through internal accruals. Right now, we are at a growth phase, adding some 9 million tonnes of capacity. So, we are using the funds as growth capex.
Our debt is not expected to go up much this fiscal. It will be range-bound, may be ₹3,000 crore of addition of debt once the JISPL (formerly Monnet Ispat & Energy) merger [with JSW] is announced.
How much of the planned expansion will go on stream this fiscal?
Our capacity addition plans are on track, and around 9 million tonnes (mt) will come on-stream this year, taking the total production capacity to 37 mt. By the decade-end, our total capacity will be 50 mt.
What are your plans towards ramping up of downstream and value-added product categories?
JSW Steel has a 55-60 per cent share in value-added and specials. Last year we sold 12.36 mt (value-added and specials), a 17 per cent year-on-year increase from FY22 when we sold 10.6 mt.
These products go in automotive, consumer durables, wind, solar, and various applications in oil and gas and general engineering sectors. We feel India’s demand profile is changing, and consumption will be more for value-added products. Therefore, we’ll look at construction appliances, renewables, packaging and so on.
Our new line in Tarapore for tinplate – a second manufacturing line – has started in addition to the first one. The plate mill in Anjar is doing quite well and is supplying to the wind energy sector, apart from defence.
Our continuous annealing line facility at Vasind will cater to the automotive segment. We will also get additional volume coming in from Jharsuguda. So, as FY24 guidance, JSW will be in the 55 per cent-plus range in the value-added mix. But, what is more important for us is growth every year.
With steel prices going down again, is there a probability of imports going up?
Low-priced imports, zero duty imports, and cheaper priced offerings coming in continue to be a concern for us. In FY23, imports were up significantly while exports dropped. Manufacturing and investments [in steel] are being done in India, and it is to be seen that these investments do not get adversely impacted.
Demand on the international side has been little volatile. But last year, despite volatilities, including export duty levy, we [JSW] did quite well with a lower mix of exports. In FY23, our exports were in the 12-15 per cent range.
Our export volumes last year was 2.8 mt; we will grow them by another 15-20 per cent or 3.2–3.5 mt range if opportunities are there.
So, the export mix will be in the 12-15 per cent range, and domestic at 85-88 per cent.
What is the outlook of your overseas subsidiaries?
Ohio subsidiary did well with respect to operations, and Baytown is certainly doing very well in terms of volumes, operations and profitability. Ohio could not break even, but production numbers have gone up sharply since March; utilisation is up to 64 per cent and losses have reduced from $23 million to $12 million sequentially. Last year it was impacted by inventory losses, which we do not see happening this year.
Going into the year FY24, we see renewable energy, especially wind, barges and infrastructure picking up in the US. This is a positive for Baytown.
In Italy, the profitability has primarily come about from the rail orders, which has recently been given by the government there [in Italy]. And, we see a good visibility on railway orders going ahead for the better part of this year.