DNA reported that the reduced demand in the steel sector has forced JSW Steel to rewrite its INR 350 billion steel project plan in West Bengal and that it has slashed the investment in the first phase of the project by 60% to INR 40 billion.

As per the original plan, the company was to set up a 10 million tonne per annum in the state in three phases, by 2020. It was supposed to invest INR 100 billion in the first phase, which was to be completed by 2012.However, the current market conditions have forced JSW to push the proposed steel plant to the next phase.

JSW Steel said that it is going slow on projects where financial closure has not been achieved. Unless rates come down they will not like to borrow any money. Therefore, they have not gone further with any syndication of loans for the West Bengal project.

It said that they hoped the Phase 1 of the West Bengal project will achieve financial closure by March. They expect the interest rates to come down to below 10% by then from around 12% now.

Mr MVS Seshagiri Rao director of finance said that the firm will set up a beneficiation unit to purify iron ore, a pellet plant and develop coal mines with an investment of INR 40 billion in its first phase. Mr Rao said that "We are implementing the Bengal project in phases. Phase-1, we are working on the raw material side. By end of this quarter, we hope to achieve financial closure for it."

In November, JSW Steel laid the foundation of the 10 million tonne steel plant, which is expected to be operational by 2020. The company, which acquired 4,500 acres of land for the plant, owns 89% of the equity in the Bengal unit while the remainder is held by the state government

(Sourced from DNA)