JSW Steel plans to invest ₹20,000 crore in capital expenditure this financial year and does not expect the new export duty to either impact its sales and output or bring down capacity utilization. The fresh capital expenditure includes ₹18,000 crore investment in JSW Steel and ₹2,000 crore in Bhushan Power and Steel.
The company will spend ₹18,000 crore to increase production capacity to 36 mt, from 26 mt despite the possible moderation in demand due to hike in interest rate. The company had cut its planned capital expenditure of ₹18,240 crore to ₹14,198 crore last fiscal year due to the second Covid wave.
The company has given a instruction to produce 25 million tonnes of steel and sell 24 mt this fiscal year. The government had imposed an export duty of 15% on steel products to bring down soaring domestic prices. However, in a bid to bring down production cost, the government has also called off customs duty on the import of some raw materials, including coking coal and ferro nickel, used by the steel industry.
The export duty, as the company understands, is a temporary measure to cool down inflation. While the market has given too much substance to the export duty and turned negative on steel sector, it has totally missed out on the fall in raw material prices. The government has also increased the export duty on iron ore from 30% to 50% which will bring down cost usefully, said, Seshagiri Rao, Joint Managing Director, JSW Steel.
