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JSW Steel, the country's leading steel producer, reported a remarkable five-fold increase in its consolidated net profit for the December quarter, attributing it to volume growth in India and robust performance from its international subsidiaries. Although the company has adjusted its capital expenditure guidance for FY24, reducing it by ₹2,000 crore (10%), the CEO, Jayant Acharya, assures that this will not impact expansion plans.
Acharya acknowledges that the recent uptick in iron ore and coking coal prices will exert some cost pressure in the current quarter. However, he remains optimistic, citing the expectation of higher volumes and stable global steel prices to offset these challenges. The CEO anticipates a USD 20-25 per tonne increase in coking coal costs but notes the recovery in global prices, bringing local prices closer to parity and enhancing export opportunities.
Reflecting on the Q3 performance, Acharya highlights strong production figures, with consolidated production reaching an all-time high of 6.87 million tonnes. The US market exhibited improved demand and rising prices, a trend expected to continue in the current quarter. Additionally, positive traction in Italy's rail business contributed to an overall improved international performance.
Addressing concerns about the reduction in FY24 capital expenditure, Acharya asserts that it will not impede the company's goal of achieving a 50 million tonnes capacity by 2030. He attributes the reduction to a timing issue, assuring that the company is on track to meet its ambitious target.
Responding to the increase in debt levels during Q3, Acharya attributes it to higher working capital. However, he expresses confidence that with anticipated higher volumes and inventory liquidation in the next quarter, improved cash flows will mitigate this debt increase. Acharya believes that the debt levels have reached their peak for the time being.
Looking ahead to FY25, Acharya mentions plans to refinance debt, both international and domestic, to capitalise on more cost-effective opportunities, given the expected moderation in interest rates. Despite input cost pressures, JSW Steel remains poised for growth and continued success in the coming quarters.
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