JSW Steel will invest Rs. 12,000 cr to boost output.

JSW Steel has chalked out a plan to raise production capacity to 18 million tonnes (mt) a year from 14.3 mt now, with an investment of Rs. 12,000 crore in the next two years. The company will also invest in backward integration projects and cost reduction.

The steelmaker plans to invest Rs. 7,500 crore in the current financial year, it said in a statement, ahead of the annual general meeting on July 31.

JSW will seek shareholders' approval to issue non-convertible foreign currency denominated bonds worth $2 billion (about Rs. 12,000 crore) in the overseas capital market, and Rs. 4,000 crore through the issue of warrants to qualified institutional buyers.

Besides, it considers issuing foreign currency convertible bonds that can be converted into equity shares worth $350 million.

The company has also proposed to enhance the borrowing limits to Rs. 50,000 crore from Rs. 40,000 crore to fund expansion.

Justifying the investment and fund raising plans, JSW said it is in the interest of the company to arrange long-term funding to meet the planned capital expenditure and other corporate purposes, including refinancing of expensive debt, reducing interest costs and meeting any unlikely shortfall.

JSW Steel has already decided to enhance capacity at its Dolvi unit in Maharashtra to 5 mt from 3.3 mt with an investment of Rs. 3,300 crore.

The cost of expansion works out to Rs. 20,000 a tonne against Rs. 70,000 a tonne for a new steel plant.

The company has undertaken various projects at its Vijayanagar plant in Karnataka to reduce cost of production. However, short supply and poor quality of iron ore hit operations at the plant.

HBL