Enough liquidity to handle capex for growth cycle: JSW Steel Joint MD & CEO

Acharya says that the company is on track with its expansion plan

JSW Steel reported a consolidated net profit of Rs 2,415 crore in the third quarter (Q3) of 2023-24 (FY24), surpassing Street expectations in a quarter marked by declining exports and retail sales. In a virtual interview, JAYANT ACHARYA, joint managing director and chief executive officer of JSW Steel, tells Ishita Ayan Dutt that the company is on track with its expansion plan. Edited excerpts:

JSW Steel’s net profit in Q3FY24 surged nearly fivefold year-on-year (Y-o-Y), but quarter-on-quarter (Q-o-Q), there was a drop.
 

JSW Steel had a very strong production performance — sequentially, we had an 8 per cent growth and Y-o-Y 12 per cent on the back of better capacity utilisation.

Sales were lower sequentially due to a fall in exports and retail sales. But we did very well concerning our institutional, original equipment manufacturer and industrial sales, which grew by 8 per cent sequentially and 12 per cent Y-o-Y.

We had the highest-ever quarterly sales in automotive, packaging, and renewable energy; appliances also had good growth sequentially and Y-o-Y.

What is the outlook for the fourth quarter of FY24?
 

Despite many geopolitical challenges and headwinds of high-interest rates, the global economy has held up to the extent that we have avoided a recession in the developed world. Domestic prices are now near parity with import prices. This will result in two benefits — imports will be limited due to better international prices, and we expect better export orders. Also, January-March is seasonally a better quarter, and we expect good volumes aided by the liquidation of inventories.

You have cut capital expenditure (capex) for FY24 by about Rs 2,000 crore. Is the capacity of 50 mt by 2030 on target?
 

We believe 50 mt is on target. On capex, we have indicated Rs 18,000 crore for FY24 against our earlier envisaged Rs 20,000 crore. It’s more from a timing point, but we are maintaining the run rate on capex for this quarter as well.

Despite a difficult last quarter, we did generate Rs 7,180 crore of earnings before interest, tax, depreciation, and amortisation, giving us enough liquidity to handle our capex for the growth cycle in the country.

We will have additional volumes coming in from the capex in progress for both Vijayanagar and Bhushan Power & Steel, and the incremental capacities coming in 2024-25.

There was concern about imports, with the increase in global steel prices. Is that now easing?
 

Overall, imports have gone up sharply. India is seeing very large exports coming in from China, specifically in the current financial year. Even the free trade agreement countries’ share has gone up.

Q-o-Q, our imports have increased by 16 per cent, and our exports have dropped by 16 per cent. It’s not a very comfortable situation to be in. We should be careful concerning cheaper imports or unfair trade that comes into the country.

Do you see domestic steel prices increasing in the near term?
 

Coking coal and iron ore prices are elevated. Therefore, steel prices internationally have moved up. I am hoping that this will translate into better prices in the coming months in India.

JSW was scouting for coking coal assets in the international markets. Any headway?
 

We continue to look at assets internationally as well as domestically. We aim to look at better raw material securitisation, both in iron ore and coking coal. On the coking coal side, we did look at assets in Canada (Teck Resources). That asset has now gone to different buyers.

You have received possession of land for the 13 mt greenfield steel plant in Odisha. What is the project timeline?
 

From a project perspective, the focus in the first phase will be the pellet plant, which we will link with the slurry pipeline.

On the acquisition front, what is the status of the NMDC Steel plant and Vedanta’s assets that you were looking at?
 

There is a status quo on NMDC. As far as Vedanta is concerned, our interest is more in the mining operations. We continue to remain engaged, in case it makes strategic and commercial sense; we will look at it.