How JSW Steel's Joint Ventures Put It On Track To Being Among Top Global Steelmakers Outside China

Last year was a transformation year for JSW Steel. We had a very strong operational performance in spite of challenging external environment. The second thing is that we were able to conclude our joint venture with JFE Steel, a strategic partner for us for a long time. And we also signed the joint venture with POSCO. So, two leading global steel players. The third thing is that strategically we have been able to strengthen our balance sheet. We are now much stronger. We have been able to deleverage and that creates a foundation for the next stage of growth. We believe that India is a big opportunity. We are convinced about the India story for the next two decades, and therefore the conviction for us to build on capacity. We see the industrial ecosystem in India growing, the manufacturing in India growing. With China slowing down, India is the best second alternative for manufacturing, for India and for the world. And steel is an essential raw material for manufacturing. The other sectors like infrastructure, construction and infrastructure, and the renewable energy, which is more important now from energy security point of view, also consumes a lot of steel. So it gives us the necessary impetus to add steel capacity in time to be able to meet the entire demand. So, with 62 million from JSW Steel and 16 million tons from our joint ventures, we would be 78 million tons in India and if you would look at our international, maybe close to 80 million tons. That does bring us probably close to many countries' production today. Yes, we would like to be one of the largest steel players globally and I think this brings us to the top few in the world. Iron ore we have currently 25 mines out of which 13 are operational. We have 1.7 billion tons of resources and some of the mines which are under exploration, the resources are yet to be defined. We continue to look for assets which are closer to our manufacturing sites so that we are logistically better equipped to take the iron ore. We are adopting low grade beneficiation of iron ore which are available in our areas in Karnataka or in Orissa through new technologies which have come up. So we aim to have a 50% captive as we grow our capacity in iron ore and the same for coking coal. As of now, our expansions which we have contemplated in US are already coming to an end. The expansions will enable us to offer better quality and a better product to the American market. That would give us a better value in terms of performance as we go to the next year. Italy also we would be adding which we have already announced earlier some head hardening and longer rails which would meet the requirements of the European market. In addition to that, we are not planning any additional investments in US and Europe. Our focus is on India. And our growth of capacity is more India-centric. We are at a 1.8 net debt to EBITDA as we exited last year. With some more funds which would be coming in from our joint venture and the cash flows which this year would generate from additional volumes, we are quite confident that the net debt to EBITDA ratios will improve. However, we have kept our comfort level at 2.5 or below. We feel we will be able to expand our capacities with a very strong financial discipline which we want to do. So it will be proven capacity expansion making sure that our ratios which we have guided remain intact.

In the near term, this year and next year, we will be adding capacities from ongoing expansions in Vijayanagar and Dolvi. Vijayanagar will get completed in the next month or so and Dolvi will get completed by September 27th. With that we would add further 7 million tons to our capacity. And this will add to the EBITDA and the profit which the company will generate for the next leg of expansion. We are very confident as I mentioned about the India story. And the trajectory of growth fundamentally is intact. The West Asia conflict is a road bump which has come on the way, but I'm sure if this doesn't become too prolonged we will be able to resolve it and put it behind us. And we are very confident and very positive about the India economic growth and we look forward to supporting that growth.