JSW Steel to invest over Rs 5,000 cr on strengthening downstream manufacturing capacity
20 November 2018
JSW Steel plans to pump in over Rs 5,000 crore to strengthen its downstream manufacturing capacity and is also keen to pursue stressed downstream assets that will come up for bidding in the next round.
JSW Steel, which announced a capex investment programme of nearly Rs 45,000 crore to expand its capacities in Karnataka and Maharastra, is planning to invest over Rs 5,000 crore to strengthen its downstream manufacturing capabilities, company's Joint MD Seshagiri Rao told PTI.
This will enable the company to re-orient its product mix and focus on high value special steel products and customisation, he said.
"As part of its effort to ramp up downstream capabilities, JSW Steel will also pursue stressed downstream steel assets that will come up for bidding in the next round," he added.
"The next set of assets is either downstream or very small capacities. So, if it makes sense to our downstream integration strategy. We will evaluate the asset and pursue," Rao said.
The investment in downstream capabilities by JSW Steel is aimed at capitalising the incremental demand expected to be generated across sectors for specialised steel.
While 300 million tonnes (MT) of steel consumption is expected to come in, the steel intensity across applications is coming down.
"This is where the demand for very high value steel products is rising. Circular economy is becoming very active," Rao said.
Jayant Acharya, Director Commercial - Marketing and Strategy, JSW Steel, said, the company will "reduce focus in commodity space and enter into alloy steel and special steel space to make the business more sustainable in the long term. Our aim is to look at more and more de-competitive business segment as a key indicator of focusing more on special steel categories".
As part of its long-term play, the company is depriortising its focus on commodity steel space.
According to Rao, while overall capacity of JSW Steel will grow by 40 per cent over the next three years, the downstream capacity will increase by 60 per cent, colour coated capacity will go up by 140 per cent and tinplate capacity will increase six-folds.
The company expects special steel products to contribute 40 per cent of its future volumes while customisation products will add the rest 60 per cent.
"We are not going to produce commodity. Basis our very customised steel portfolio and high-end value-added product mix, the business will become less volatile," Rao said.
JSW Steel believes that it is unperturbed about new competition from global steel players.
"We think there is enough space for growth and healthy competition is good. If you look at competition earlier, certain companies which were stressed were at times forced to sell materials at lower prices to generate cash flows whereas with healthy competitors that problem will be eliminated to some extent," Acharya said.
The company said that it sees the Indian steel landscape becoming more mature from a competition perspective.
"We see our growth potential with respect to India across short, medium and long term. I don't think we need to worry about the competitive landscape," he added.