Steel leads India Inc’s capacity expansion DEV CHATTERJEE, ADITI DIVEKAR & ISHITA AYAN DUTT TOP PERFORMERS IN /Kolkata, 27 June WHO IS MARCH QUARTER is not the only firm planning EXPANDING? (sales growth YoY in %) massive investments in a new business and other Iron & steel 49.8 verticals. Several top companies, led by steel Auto* 49.4 majors ArcelorMittal Nippon Steel India (AM/NS Non-ferrous 46.8 India), JSW Steel, , as well as aluminium major Hindalco, are planning to Cement 31.4 expand capacity in the next few quarters as FMCG 30.8 demand from their customers rises. Refineries 17.7 AM/NS India, a joint venture between the | Reliance Industries | ArcelorMittal world’s leading steel maker ArcelorMittal and Nippon Steel India | JSW Steel/ Construction 14.2 Japan’s Nippon Steel, has plans of ramping up JSW Energy | Jindal Steel & Power Pharmaceutical 13.2 capacity to 30 million tonnes (mt) at an | Tata Steel | Hindalco/UltraTech *and auto ancillaries > investment of ~85,000 crore. Turn to Page 6 | Adani Enterprises Source: CARE Ratings the Department of Investment ~7,000 crore for debottleneck- Sajjan Jindal-led JSW Steel and Public Asset Management ing is underway. In addition, plans to spend ~47,457 crore (DIPAM) — Deloitte Touche AM/NS India has signed a towards capex in the next three Tohmatsu India and SBI memorandum of understand- years for adding 5 million Capital Markets — have ing for a new 12-mt integrated tonnes per annum (mtpa) steel- reached out to investors on plant in Odisha, at an invest- making capacity at Vijayanagar behalf of the government. ment of ~50,000 crore. in , and building a More consultation with “Though the average capac- mining infrastructure in investors will take place once ity utilisation of Corporate Odisha. The new projects will the embedded value of LIC is India is still low, there are few cost the company ~25,115 crore, derived. As the exercise to companies — mainly in ports while the ongoing capex, derive LIC’s embedded value is and renewables — which have including doubling of capacity ongoing, it recently appointed begun the groundwork to set at Dolvi in to 10 a data auditor, the second offi- up additional capacity. The mtpa, will require ~22,342 cial said. The embedded value ArcelorMittal plant, for crore. is expected by August. The IPO instance, is currently produc- Another group company is being targeted for the last ing steel at 100 per cent capac- JSW Energy is pursuing a quarter of this fiscal year. This ity,” says an analyst with a for- growth strategy to expand from launch timeline has been eign brokerage. 4.6 gigawatt (Gw) to 10 Gw by agreed upon by all stakehold- Among the new-gen com- 2024-25, and 20 Gw by 2029- ers, including DIPAM, LIC, and panies, Ola Electric is set to lift 30, with the entire capacity the advisors involved. off its electric scooter produc- addition being via renewables. tion after starting work on a Of this, 2.5 Gw is currently brand new plant just four under construction. It plans to Steel leads... months ago. Rising sales and sign a power purchase agree- profits in the March quarter of ment in the next quarter. The current steelmaking 2020-21 (FY21) is giving confi- Naveen Jindal-led Jindal capacity at Hazira in Gujarat is dence to companies to restart Steel & Power plans to double 9 mt; it will be ramped up to 14 work on expansion plans. capacity to 12 mt at Angul and mt in the next three years and The recovery process for Raigad over the next three later to 18 mt. The two phases Indian corporates started from years. The capex of about of expansion are expected to the quarter ended December ~17,000-18,000 crore for the cost ~35,000 crore. An ongoing 2020 as demand from cus- expansion will be done via capital expenditure (capex) of tomers rose. “Barring the internal accruals. impressive top-line and bot- Tata Steel has planned a tom-line numbers, a cardinal capex of ~11,000 crore for 2021- # 3395 point about this (March 2021) 22, of which around 70 per cent quarter is that there has been a has been allocated to the broad-based increase in the expansion of its India opera- operating expenses of the com- tions. has also panies on the back of a global planned a massive expansion rally in commodity prices and plan in its ports and logistics ramping up of production business and targets to emerge activities,” says a report by rat- as the world’s largest private ing firm, CARE Ratings. port company by 2030. Iron and steel, along with For the Indian information auto and auto ancillary, have technology (IT) services sector, been the best-performing the biggest cost is employees. industries, with net sales Hence, the capex in the past growth of almost 50 per cent in was all about expanding capac- the March quarter of FY21. ity, in terms of physical infra- As capacity utilisation of structure and investments in these industries went up, top technology (tech) upgrades. companies are now revisiting India’s largest IT services their plans. Aditya Birla player, Tata Consultancy Group’s is Services’ (TCS’) capex ratio to planning to invest ~3,000 crore total revenue was 2 per cent in over the next two years in 2019-20 (FY20) and 1.9 per cent downstream projects to in FY21. “Capex related to tech increase contribution of value- upgrades will accelerate. The added products. Company offi- focus will be on refreshing cials said the investment in some of the IT hardware. The Easy:Easy: increasing flat-rolled product overall capex will be similar to capacity at Hirakud itself will FY20’s,” said V Ramakrishnan, entail an investment of ~2,700 chief financial officer (CFO), Solution crore; the rest of the capex will TCS, in a conference call after tomorrow be towards producing alumina the March quarter results. specialty chemicals. Another is also planning to HOW TO PLAY group company UltraTech ramp up capex, but it will still Fill in the grid so that Cement has already approved be below pre-pandemic levels, every row, every col- an investment of ~5,477 crore said Nilanjan Roy, CFO, umn and every 3x3 for raising capacity by 12.8 mt, Infosys, soon after declaring box contains which will be a combination of the March quarter results. the digits 1 to 9 both brownfield and greenfield expansions. With inputs from Shivani Shinde