JSW Steel to use Rs 18,000 crore fundraise to refinance debt in FY24 – ET Infra


MUMBAI: JSW Steel, which recently announced a fresh plan for raising Rs 18,000 crore, will use the entire proceeds to refinance its upcoming debt maturities of around Rs 14,000 crore in FY24, a senior company executive told ET.

The steelmaker, which is also looking to expand production capacity, will meet its capital expenditure requirements from internal accruals, joint managing director Jayant Acharya said.

The company’s board on Friday gave its approval to raise up to Rs 18,000 crore in debt through a mix of dollar bonds, non-convertible debentures and convertible instruments.

While a majority of Indian steelmakers pruned debt from the windfall from the recent commodity upcycle, JSW Steel used the proceeds towards capacity expansion. The company is confident of its bet on expansion paying off with an increase in its market share in the coming years, Acharya said.

“We closed last year at close to a 17% market share, and we do expect that with our increasing capacity, we will be able to tap into the domestic market and grow our market share,” said Acharya, who is also the company’s new chief executive officer. The flagship company of the JSW Group has recently completed the expansion of its plant at Dolvi in Maharashtra, where it doubled capacity to 10 million tonnes. It is in the midst of expanding capacity at its Vijayanagar plant in Karnataka by 5 million tonnes. The company has, in the last few years, also acquired distressed assets Bhushan Power & Steel and Monnet Ispat & Energy, and now has the capacity to produce 27 million tonnes of steel in India a year, the highest among peers.The company produced 24.16 million tonnes of steel in FY23 on a consolidated basis and has guided for producing 26.34 million tonnes in the current year, an increase of over 9%. Acharya predicts the demand for steel in India to grow at about 7-8% this year after two years of double-digit expansion. He expects steel demand to continue increasing in the coming years on the back of a growing economy and the government’s infrastructure push.

“It takes about three to four years to add capacities, and unless these are added in time, it will be difficult for India to domestically meet its requirement,” Acharya said.

Apart from its pursuit of growing volumes, JSW Steel is simultaneously enhancing its product mix to remain relevant to ongoing projects. The company, for instance, has supplied more than half of the steel needed for the Mumbai-Ahmedabad bullet train project.

It has also traditionally enjoyed the reputation of pursuing growth without sacrificing profits, as investors have acknowledged the company’s capacity addition at a lower cost than that of its peers, which has also helped keep a check on its debt levels. Its consolidated net debt rose to ₹59,345 crore rupees as at March end, up from ₹56,650 crore a year earlier. Its net debt to equity ratio was 0.89, while the net debt to operating profit ratio was 3.20.

Even though JSW Steel will spend ₹18,800 crore on capital expenditure this year, the company is confident that debt will remain manageable, with the net debt to operating profit ratio remaining below 3.75 time.

“We are not at all concerned from a debt perspective. Our debt today is looking higher because 10 million tonnes of capex is underway.Our cash balance is also strong, and we see our ability to raise the capacity for growth in time enabling us to capture the domestic market,” Acharya said.

  • Published On May 22, 2023 at 07:58 AM IST

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