JSW Steel is in discussions with State Bank of India and ICICI Bank to secure ₹2,500 crore to fund its capital expenditure plans. The company aims to issue non-convertible debentures at an interest rate of 8.5% to raise the funds, sources close to the development said.
“SBI may lend a larger share of ₹1,500 crore while ICICI Bank could take around ₹1,000 crore in the loan,” said a source close to the development. “The talks are in advanced stages.” JSW Steel, ICICI Bank and SBI did not respond to requests for comment. JSW plans to invest ₹20,000 crore in FY25 to expand its production capacity, with a target to increase its output to 50 million tonnes by FY31. The move is part of JSW’s strategy to bolster its market position and meet growing demand.
JSW Steel’s consolidated capex spend for Q4 FY24 was ₹3,500 crore, with a total of ₹16,752 crore for the entire fiscal year.
The company expects to spend around ₹20,000 crore in FY25, focusing on new facilities at Vijayanagar and BPSL, which will be ramped up during the year, leading to higher production volumes, according to its latest investor presentation. The company’s net debt was ₹73,916 crore as of March 2024. Foreign currency debt is 57% of the borrowing while the remianing in rupee loan.
Cash flows from operations and unencumbered cash and cash equivalents amount to ₹12,590 crore as of March 31, 2024.
The company’s sizable capital expenditure plans of ₹64,434 crore, to be incurred during FY25-FY27, would keep its free cash flows under check and keep the overall debt levels elevated in the medium term, said Icra Ratings in a report.
A large part of this capex would be towards the conclusion of the brownfield capacity expansion at Vijayanagar and BPSL in FY25, a 5.0-MT brownfield expansion at Dolvi, expansion of its downstream capacity, and enhancement of its iron ore mining infrastructure, pellet plant and slurry pipeline in Odisha, among others, the report said.
