Despite the spread of coronavirus and the resultant nationwide lockdown, JSW Steel never wanted to halt its manufacturing capacity expansion at the Dolvi plant in Maharashtra. Now it needs about 15,000 workers to continue the construction work, while it has less than a third of the required manpower at the site.
Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel said that the steelmaker has a worker strength of 3,500-4,500 at the Dolvi site. "We had about 15,000 workers involved in the expansion just before the lockdown. Now it seems that bringing them back will take a lot of time," he told Business Today.
Shortage of construction materials and its movement have become other issues. "We have six-seven months of work left to complete the expansion. Now the project will be completed by March 2021 instead of September 2020," he added.
JSW Steel had earlier announced that it has scaled down the capital expenditure plan to Rs 9,000 crore for FY21-- Rs 8,200 crore for expansion and Rs 800 crore for the mining -- from the earlier guidance of Rs 15,000 crore.
It has Rs 7,500 crore repayments lined up for this year. "We have additionally raised Rs 7,500 crore for the capex this fiscal. But the debt won't go up as we will do Rs 7,500 crore repayment from the cash flow at the same time. Whatever we raised will be used for capex and cash accrual will be used for repayment," he said.
Rating agency Moody's Investors Service recently placed JSW Steel's Ba2 corporate family rating (CFR) and the Ba2 senior unsecured rating under review for downgrade. The ratings outlook has been revised to 'ratings under review' from 'stable'. Moody's expects to conclude the review within 90 days.
Rao said, "We are not much concerned about the downgrade. We can raise foreign currency loans from the banks, export credit agencies from where we can get long-term credit at OECD consensus rate. The third source of fund is foreign portfolio investors who will invest in rupee-denominated NCDs. Fourth is bond market where rating is not required."