India’s largest steel maker, JSW Steel, reported a strong fourth-quarter performance and unveiled an aggressive expansion plan despite mounting geopolitical uncertainty.
Joint managing director and chief executive Jayant Acharya told Sambit Saha of The Telegraph that the company aims to rank among the world’s top three steel producers by 2032, driven by what he described as a “double-engine” partnership model with global majors, including JFE Holdings and Posco. An excerpt
The Q4 has been a blow-out quarter — is this the impact of the safeguard duty playing out?
It was on the back of strong operational performance – sales were good, we liquidated 0.7 million tonnes of inventories in the quarter. Production was also very good, despite BF3 (a blast furnace in Vijayanagar) shutdown, the capacity utilisation was at 96 per cent. We have put in close to 18,000 sensors making preventive maintenance much stronger. As a result, asset utilisations, plant reliability improved.
Contribution from value added and special products improved sharply in Q4, going up by 18 per cent to 5 million tonne (mt). We sold more in automative, renewables, packaging. Also, there was a seasonal tailwind in terms of demand, especially March. Prices also started moving up because of the safeguard duty. The Iran conflict also pushed up commodity prices in general.
How do you see steel prices moving in this quarter and the next, given that India is at a premium to international prices?
Prices went up gradually in every month between January and April. So, the impact will play out fully in this quarter. Cost has gone up on account of coking coal and ocean freight. But in spite of that, we will have a better spread in this quarter.
If I look at Europe and the USA, prices are at $830 and $1,100 a tonne, respectively. In comparison, prices are still low in India, at around $62-630 a tonne. I feel the prices will be now range bound and people will watch the geopolitical situation and then calibrate accordingly. But our prices for the automotive segment and quarterly prices are going to get recalibrated because they have not been increased in Q4.
How confident are you that India will continue its growth momentum despite concerns about the West Asia crisis?
We are cautiously optimistic; because while the West Asia crisis is temporary, the structural story of India is long term. Even in the Covid period, the bounce-back was quite fast after the initial concerns abated. My feeling is it will play out again.
Despite the geopolitical turmoil, JSW has announced massive expansion plans. Take us through the thought process behind it.
We have a strong conviction on the India growth story for the next two decades. We feel that India will be the next opportunity for growth in the world. While others are slowing down, India will pick up.
Self-reliance is extremely critical now. India needs supply chains within the domestic boundaries. The industrial and manufacturing ecosystem will go up, backed by infrastructure.
All that will require steel. Every year, incremental demand of 14-16 mt is coming up. Unless you set up the capacities for that now, you will not be able to meet that demand in India.
With a 62-mt target by 2032, will JSW be one of the top producers in the world, outside China?
I think we will be in the top two to three in the world, even if you include the Chinese side.
Now, the capex approved till March 31 is ₹1.26 lakh crore. Will that be enough to reach the 62 million tonnes and also contribute for the JFE and Posco JVs?
With that capex we will reach 49 mt in India and with the JV (with JFE for erstwhile BPSL) and Ohio facility, it will hit 55 mt.
To reach 62 mt from thereafter, with 10 mt expansion at Paradip, electric arc furnace at Kadappa (Andhra Pradesh) and green steel unit at Salav (Maharashtra) — an additional ₹80,000-100,000 crore investment will be needed.
And that would mean a spend of about roughly ₹30,000 crore a year. But we are quite hopeful that we’ll be able to do this because these are all on brownfield sites.
You have inked two separate joint ventures (JVs). How does the company benefit from the same?
Our idea of the strategic investment with leading international players is basically that we’ll have a double engine of growth in India.
To meet projected demand, we have to step up. To do it on our own would take slightly longer. To be able to do it along with a double engine is faster. JFE has been a long-term partner for us.
Posco is one of the best steel producers in the world and will bring in automotive and other technologies to the joint venture in India.
And JSW’s execution strength, its ability to be cost efficient, both with respect to operations and capital expenditure and to execute faster makes it an ideal partner. With JFE and Posco, we are looking at additional volume of 10 mt and 6 mt respectively, which will take us to 80 mt (with JVs) by 2032.