Sajjan Jindal-owned JSW Steel today said it planned to shut down its mills in the US for three months from June due to poor demand, and in the interim it will take measures to upgrade and modernise the units.
“Our US mills are running at 10-15 per cent capacity now. Instead of running them at that level, we are thinking of temporarily closing them down to upgrade and modernise them in the interim,” said M V S Seshagiri Rao, joint managing director and group CFO, JSW Steel.
Rao, however, said that a decision on that front would be taken by the end of the month. The cost for the purpose would ‘not be much’. “There will not be any job cuts,” he said.
Sajjan Jindal-owned JSW Steel had acquired the mills in the US in November 2007 for $800 million from Jindal Saw, owned by his elder brother PR Jindal. These mills have 1.2 million tonnes plate and 0.5 million tonnes of pipe making capacity in a year.
Following the acquisition, JSW turnaround these units and reported an EBIDTA of $46 million in the first five months of operations up to March 31, 2008. The company further reported EBIDTA of $75 million in the first six months of FY'09.
However, following that, due to recession and slump in steel demand, almost all the still mills in the US started running at much lower capacity, Rao said.
On May 12, the company had said that the recovery would start in the next few quarters following the stimilus package announced by the US administration and US operations are expected to pick up soon.
