JSW Steel’s slash in capex by about Rs 5,000 crore for the current fiscal comes on the back of lower cash generation in the June quarter, and the company would review it later. However, there will be no changes in its long-term plans.

JSW Steel, the flagship company of the diversified JSW Group, had earlier earmarked a capex of Rs 20,000 crore for the current financial year, an increase from Rs 15,000 crore spent in FY22. However, this was trimmed to Rs 15,000 crore, reducing it to the same levels as the previous year.

“The cash generation during the first quarter was much lower than what was planned. We are now putting on hold discretionary capex and that for special projects, while there will be no changes in normal capex and our long-term investment plans for next two years. We will review this cut two quarters down the line,” JSW Steel joint managing director & group CFO Seshagiri Rao MVS told FE in an interview.

The company was also looking at expanding its production capacity in India by adding another 10 million tonne per annum (mtpa) and increasing it to 37 mtpa by FY25. This was to be mainly funded through internal accruals.

“There is no change in growth capex,” he said, referring to expansion of production capacities. While there are no planned shutdowns for the year, JSW Steel would continue with the temporary closure of certain facilities of Monnet Ispat & Energy’s (now JSW Ispat Special Products) plant for “some more time”.
Earlier on Friday, JSW Steel reported an 85.77?ll in consolidated net profit at `839 crore for the June quarter.

“Many things came together in the last quarter. The steel prices corrected by about 20% both globally and in India, following the Ukrainian-Russian war, and over and above that, energy-related commodity prices went up. These included prices of thermal coal, coking coal, crude and gas. The cost pressures were very high, while the steel prices were low,” Rao said, adding that the depreciation of the rupee also played its part.

Now, steel prices are stable and enquiries for restocking have started.

“We expect Q3 to be a good quarter as low-cost production of steel will happen, and margins will be restored,” Rao said.
On plans of turning around its Italian operations, Rao said the firm has done well in the last quarter and is also getting orders. “We are looking to divest part of the operations in Italy, other than the rail mill, if we get a good opportunity or attractive value,” he added.

In 2018, the company had acquired stakes in Italian businesses as part of its overseas expansion plans. The businesses were bought from Cevitaly Srl, a wholly-owned unit of Algeria’s Cevital SpA.

On the industry’s concerns about cheap imports of Russian steel, some traders had booked 150,000 tonne at distressed prices. “Except this one consignment, I don’t think anything is coming to the country at low prices.”

Talking about the outlook for the industry, Rao said there were positive signs. The auto sector is doing well and there are a lot of wind power projects coming up, while government expenditure on infrastructure is rising and a number of residential housing projects are being announced. “Overall, we are seeing good traction,” he added.