After reducing its investment in the first phase of the its ambitious 10-MTPA West Bengal project by almost a third, JSW Steel said on Tuesday the commencement of construction work at the site of the mega steel plant will now be deferred on account of the current 'economic situation.'
"There is a slight deferral for some time (on the commencement of construction work) till the economic situation improves," JSW Steel Vice-Chairman and MD Sajjan Jindal told reporters on the sidelines of an Assocham conference in New Delhi.
Construction work at the site of the steel project in Salboni, West Bengal, was scheduled to start in March next year, but is likely to be delayed by 6-8 months.
Faced with a liquidity crunch, JSW Steel had earlier this year said it was cutting its proposed investment by nearly one-third to about Rs 4,000 crore (Rs 40 billion) for the first phase of the Rs 35,000 crore (Rs 350 billion) mega steel project in West Bengal.
In November last year, the company had laid the foundation stone for the project and said the first phase, with a three million tonne capacity, would come up at the cost of Rs 10,000-12,000 crore (Rs 100-120 billion).
When asked if its other 10-MTPA proposed steel project in Jharkhand would also be delayed on account of the current economic environment, Jindal said the firm is working to get all the regulatory approvals, "which is a long process."
De to the current slump in the markets, the company has seen the demand for and prices of its products come down by about 50 per cent from the peak in 2008.
Moreover, Jindal said, its US mills would continue to operate at 20 per cent of the installed capacity of 1.2 million tonnes till demand improves in the country. He denied reports suggesting the mills would be shut down.
Hit hard by the global economic crisis, JSW Steel has almost halved its workforce to 400-500 employees at its US steel mills to remain competitive in the current scenario.
The mills can produce 1.2 million tonnes of plates and 0.5 million tonnes of pipes. Citing the distressed US economy, the steel major has also deferred its plans to increase its pipe making capacity by five lakh tonnes.
