JSW Steel produced 6.5 million tonnes (mt) crude steel in 2010-11, nine per cent more than the previous year, but missed its target of 7 mt. It also missed a March 31 deadline for commissioning a 3.2-million tonne per annum (mtpa) blast furnace at its Vijayanagar (Bellary) facility in Karnataka.
In its annual report dated March 31, 2010, the company had said, “Your company has worked out a business plan for 2010-11 to produce and sell 7 mt and 6.75 mt, respectively, of various steel products, showing growth of 17 per cent and 18 per cent, respectively, over 2009-10 under review.” It did not disclose how much steel it sold in 2010-11.
JSW Steel has installed capacities of 7.8 mt — Vijayanagar (6.8 mt) and Salem (1 mt). So, at 6.5 mt, it had an 80 per cent capacity utilisation in 2010-11.
“The company has missed its production guidance and it looks highly ambitious that it will achieve its guidance for 2011-12,” an analyst said on condition of anonymity.
JSW Steel did not respond to emailed queries.
The company was scheduled to commission the blast furnace by the end of March 31. “Blast furnace-IV is in the final stages of completion and testing,” JSW Steel had said in a statement yesterday.
A company official said, “There is a two-month delay in the commissioning of the blast furnace due to some technical issues, which are being sorted out.” Once the company commissions this furnace, its annual capacity will reach 11 mt.
The company says it will produce 9 mt crude steel in 2011-12 on the back of this extra 30 per cent capacity. However, it looks highly unlikely to achieve the target.
Another analyst with a domestic brokerage said, “Normally, in the first year of operation, a blast furnace is ramped up to 50-60 per cent of its total capacity. In the case of this new 3.2-mtpa blast furnace, at 60 per cent, JSW will be able to reach close to 2 mt by the end of this financial year. Couple that with its 2010-11 steel production of 6.5 mt, it will produce 8.5 mt steel at the end of 2011-12. To meet the 9-mt guidance, the 7.8-mt capacity will have to be used more efficiently and it has to produce more steel.”
