Promit Mukherjee

Mumbai: JSW Steel is planning to complete the 3-million tonne expansion of its Vijayanagar facility by October 2008, 6 months ahead of schedule, to mitigate impact of rise in raw material prices.

The capacity addition would add substantial volumes and help partially offset the flare-up in prices of key inputs, coking coke and iron ore, which have risen by 85% and 80% respectively in the last one year.

Sajjan Jindal, vice-chairman and managing director, JSW Steel, said, “Last year, there has been a huge surge in the prices of raw materials internationally and the only way to absorb majority price rise is through volumes growth.”

Y Siva Sagar Rao, joint managing director and CEO, JSW Steel, said, the new capacity would come on stream by October 2008.

The Vijayanagar facility currently has a capacity of 3.8 million tonnes per annum (mtpa) and the company plans to take it take it to 10 mtpa by 2010-end.

Out of the new capacity, 1.5 million tonne will be long products and the remaining would be flat products, Rao said.

Both long and flat products are prepared through hot rolled (HR) process using semi-finished steel products such as billets and slabs.

While slabs are used to roll flat products, billets are mostly used to roll long products.

Rao said though the 65% of capacity expansion is complete, the project cost has been overshot by around Rs 300 crore on account of rise in price of construction materials, especially cement.

“I am sure, there will be no cost escalation and we will finish the project under the revised investment of Rs 6,000 crore,” Rao said.

Jindal, while highlighting the performance of the company in the last quarter, said due to an export duty of 15% on value-added products, the company is planning to bring its exports down to 10-15% this year. Last year, the company had exported 26% of its total produced tonnage.

Source : DNA