NEW DELHI –  The Steel Authority Of India Ltd. (500113.BY) expects to invest INR145 billion in the financial year beginning April 1 to expand its annual production capacity to 19 million metric tons.

The state-run steelmaker is betting on robust growth in Indian demand despite a slowdown in the past several months, Chairman C.S. Verma said Friday.

"We are not cutting back on output or expansion, but are in fact increasing our investment," Verma told reporters on the sidelines of the Global Steel 2012 conference.

SAIL's current crude-steel production capacity is 14 million tons a year.

Verma said also that the company's capital expenditure in this financial year through March will total INR126.5 billion.

Indian steelmakers have been beset with sluggish demand from the slowing automobile and construction sectors, while prices of raw materials such as iron ore and coking coal remain high.

However, most steelmakers are optimistic that demand will return after a few quarters, because the economy's long-term fundamentals remain robust.

Verma said also that steel consumption in India is expected to grow around 7% this fiscal year, as he expects a revival in infrastructure spending in this quarter to boost sales.

Steel consumption between April and December 2011 rose 4.4% from a year earlier to 50.86 million tons.

Verma said local steel prices will likely stay stable until March--despite a fall in prices of imported coking coal--as raw material costs are still quite high.

Separately, Verma said a consortium of Indian steel companies led by SAIL will sign a pact with Afghanistan soon for developing the Hajigak iron ore deposits, for which they won a mine-development-and-operation tender floated by the Afghan government last year.

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