Mumbai: Although global growth expectations have moderated recently, the structural demand drivers for commodities like steel remain intact, said Sajjan Jindal, chairman and managing director of JSW Steel Ltd in a message to shareholders in the company’s annual report.
“The financial year gone by was a mixed bag, with most major economies rebounding from the negative effects of COVID-19. However, commodity price volatility, soaring energy prices, lingering supply chain challenges and geopolitical conflicts have made the recovery increasingly fragile,” siad Jindal in his message.
JSW Steel delivered its highest-ever Ebitdavof ₹39,007 crore and profit of ₹20,938 crore in FY22. Its net debt-to-Ebitda, on a consolidated basis, stands at a comfortable 1.45 times. Ebitda is earnings before interest, tax, depreciation and amortisation.
Jindal added that steel consumption will grow at a healthy rate and recent government measures such as the export duty on steel are only a short-term headwind for the industry.
“The future of the Indian steel industry is exciting with a steadily expanding domestic market. During FY 2021-22, Indian steel consumption grew to 106 MnT from the prepandemic level of 100 MnT. Demand is expected to grow at a healthy rate through the current decade. We view the export duties imposed on steel in May 2022 as a shortterm headwind, since they have been imposed with the objective of controlling inflation. We continue to engage with the government on this matter and believe that the duties would be withdrawn once inflation moderates,” said Jindal.
India is a cost-competitive exporter of steel, and has an opportunity to take on a larger role in the global steel trade, added Jindal. “We are expanding our India capacity in a phased manner to 37 MTPA from 27 MTPA at present to tap the opportunities in the domestic as well as global markets,” he said.
JSW Steel is expanding its Vijayanagar plant from 12 MTPA to 19.5 MTPA, while Bhushan Power and Steel is being expanded to 5 MTPA. It recently finished a 5 MTPA expansion of its Dolvi facility.
Jindal also highlighted the company’s efforts to reduce carbon emissions and other efforts on the ESG front. Last fiscal, JSW Steel raised $500 million through Sustainability linked bonds (SLB), the first such issuance by an Indian steel maker.
“The US$500 million SLB has a tenure of 10.5 years and is linked to our CO2 reduction target. We have committed to reduce our CO2 emissions intensity (Scope 1 and 2) by 42% by 2030, compared to the base year of 2005, aligned with India’s Nationally Determined Contribution,” said Jindal.
He added that JSW Steel has earmarked ₹10,000 crore for investments to reduce its carbon emissions through various initiatives, such as increasing the use of renewable energy to replace thermal power, reduce fuel rate through improved raw material quality via beneficiation, and deployment of new technology.
